A Decrease in Tax Rates

question 125

Multiple Choice

A decrease in tax rates

• A)has no effect on the AD curve.
• B)can lead to an increase in potential GDP.
• C)causes the AD curve to shift left.
• D)has no long-run effect on potential GDP.
• E)has only a short-term effect on real GDP.

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Definitions:

Variable Manufacturing Costs

Expenses that change in proportion to the amount of goods produced, including direct labor and raw materials.

Reconcile

The process of ensuring that two sets of records or accounts are in agreement, often used in accounting to compare financial records with actual bank statements.

Break-Even

The juncture where total costs and total revenues are the same, leading to neither profit nor loss.

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in dollar terms.