Which of the following is likely to occur because of a decrease in marginal tax rates?
A. A decrease in aggregate supply because people cash in their investments.
B. A decrease in aggregate demand because of an increased incentive to work.
C. An increase in aggregate supply because of an increased incentive to work.
D. A rightward shift in the Phillips curve.
Answer: C
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If the price of a product rises, consumers buy less of the good because the:
a. MU/P of the good falls below the MU/P of other goods. b. MU/P of the good rises above the MU/P of other goods. c. marginal utility of the good diminishes. d. total utility of the good diminishes. e. marginal utility of the good rises.
Assume the peanut industry, a perfectly competitive industry, is in long-run equilibrium with a market price of $5. If demand for peanuts increases and this industry is a decreasing-cost industry, long-run equilibrium will be reestablished at a price
A. equal to $5. B. less than $5. C. greater than $5. D. either greater than or less than $5, depending on the number of firms that enter the industry.
In the long run, the greater burden of a specific tax will usually be absorbed by:
a. consumers. b. the party—consumers or producers—with the more elastic demand/supply curve. c. the party with the least elastic demand/supply curve. d. shareholders and employees of the firm in the form of reduced dividends and wages.
A higher government deficit that stimulates private investment in a weak economy is termed as crowding out
Indicate whether the statement is true or false