The supply side effects of a cut in tax rates include ________ in the supply of labor and ________ in the supply of loanable funds.

Question

Quizplus · Accepted Answer

A cut in tax rates typically encourages more people to work or work longer hours because they get to keep more of their earnings, leading to an increase in the supply of labor. Similarly, with lower taxes, people have more disposable income, some of which they may save, increasing the supply of loanable funds in the financial markets.

The Supply Side Effects of a Cut in Tax Rates