A reduction in taxes may:
A)increase saving
B)increase real output
C)reduce unemployment
D)increase consumption
E)increase saving, consumption and output, as well as reduce unemployment

Question

Quizplus · Accepted Answer

A reduction in taxes can increase disposable income, leading to an increase in both consumption and saving. This increase in demand can result in an increase in real output and potentially reduce unemployment through increased employment opportunities. Therefore, the best choice is E, as it includes all the possible outcomes of a reduction in taxes.

A Reduction in Taxes May