Other Things Equal, a Reduction in Income Taxes Would

question 280

Multiple Choice

Other things equal, a reduction in income taxes would

• A)reduce productivity and reduce aggregate supply.
• B)increase consumption and increase aggregate demand.
• C)increase the supply of money and reduce investment.
• D)increase government spending and increase aggregate demanD.

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Definitions:

Incremental Cash Flow

The additional cash flow generated by a company from taking on a new project or making a new investment.

Tax Rate

The ratio of taxation applied to the earnings of a corporation or a person.

Leasing NET Advantage

An analysis to determine if leasing an asset is more economically advantageous than purchasing it outright.