If a Tax Cut Increases Peopleʹs Labor Supply, Then

question 153

Multiple Choice

If a tax cut increases peopleʹs labor supply, then

• A) tax cuts cannot affect aggregate demand.
• B) tax cuts increase potential GDP.
• C) tax cuts decrease aggregate demand.
• D) Both answers A and B are correct.

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Definitions:

Total Earnings

The sum of all earnings or income generated by an individual or organization within a specified period.

Market Value

The going price for an asset or service in the open market at which it can be traded.

Equity-Financed

Funded through the sale of owner's shares, rather than borrowing or accumulating debt.

Synergy Value

The added value created by combining two companies where the performance of the combined entity is greater than the sum of the separate individual parts.