A Report on the EU Economic Stimulus Plan Suggested That

question 41

Multiple Choice

A report on the EU economic stimulus plan suggested that "... Governments must consider ... cutting VAT [value added tax] and labor taxes ..." The VAT is similar to a sales tax. If governments follow the suggestions, there will be ________ according to the supply-side view.

• A) an increase in labor supply and a decrease in the tax wedge
• B) an upward shift in the aggregate production function
• C) an increase in the labor supply and an increase in the tax wedge
• D) an increase in saving and an increase in the tax wedge

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Definitions:

Global Warming

The long-term rise in Earth's average surface temperature, primarily due to human activities such as burning fossil fuels.

Overpopulation

Overpopulation is a condition where an organism's numbers exceed the carrying capacity of its habitat, leading to environmental degradation and diminished quality of life.

Territoriality

The tendency to stake out an area and a willingness to defend that area from intruders.

Individual Good-Collective

The concept that individual welfare or happiness contributes to the overall good or welfare of the community or society.