When a tax is lowered this will
A)raise both demand and supply.
B)lower both demand and supply.
C)lower only supply.
D)raise only supply.

Question

Quizplus · Accepted Answer

Lowering taxes can lead to an increase in supply as it can increase the profitability of producing goods and services, leading to more businesses entering the market and existing businesses expanding their production. This increase in supply can help bring down prices and stimulate demand as consumers are more willing and able to purchase goods at lower prices. Therefore, the correct answer is D, which states that lowering taxes will raise only supply.

When a Tax Is Lowered This Will