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:

Feasible Solution

A potential solution to a problem that meets all the necessary requirements or constraints.

Solver

A tool used in software, particularly spreadsheet applications, that finds the optimal solution to a mathematical problem by varying multiple variables.

Report Names

The designated titles given to reports to identify and differentiate them based on their content, purpose, or origin.

Slack

The difference between the expected time of a project or activity and the latest time it can start or finish without delaying the project.