One Argument Advanced in Favor of Not Increasing the Income

question 118

Multiple Choice

One argument advanced in favor of not increasing the income tax on individuals with high income is that

• A)increasing income tax increases wealth which contributes to increases in GDP.
• B)increasing the income tax on these individuals will reduce economic efficiency.
• C)increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes.
• D)not increasing income taxes will discourage corporations from increasing investment.

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Definitions:

Money in Circulation

The total amount of physical currency, including coins and paper money, actively used in the economy.

Velocity

The rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period.

Aggregate Demand-Aggregate Supply Model

A macroeconomic model that explains price levels and the output levels of an economy through the relationship between aggregate demand and aggregate supply.

Long Run Equilibrium

An economic condition where all factors of production and costs are variable and the market is fully adjusted to any changes.