If We Include Consideration of Potential Effects of a Proposed

question 146

Multiple Choice

If we include consideration of potential effects of a proposed tax reduction and simplification on the labor supply,we would expect crowding out of investment and net exports brought about by the tax cut to be

• A)less than it would be without the supply-side effects.
• B)increased as aggregate real income and output rise in the long run.
• C)unaffected by the shifting long-run aggregate supply curve.
• D)dependent upon the impact of this tax change on consumer disposable income.