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.

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Definitions:

Variable Expenses

Costs that change in direct relation to changes in business activity levels, such as production or sales volume.

Fixed Expenses

Costs that do not vary with the level of production or sales, remaining constant over a specified period of time.

Retailing Organization

A business entity that sells products directly to consumers, typically in small quantities.

Advertising Budget

The amount of money allocated for promoting products or services through various media channels.