The Long-Run Aggregate Supply Curve Represents the Level of Output

question 116

Multiple Choice

The long-run aggregate supply curve represents the level of output possible if the economy:

• A) is operating at full capacity.
• B) is operating at an unemployment rate of zero.
• C) has a zero inflation rate.
• D) has no structural unemployment.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of a person's income is taxed, indicating how much tax will be paid on an additional dollar of income.

Income Before Taxes

The gross income a person or corporation earns before taxes are deducted.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, serving as a useful measure of the impact of taxes on incentives to earn more.

Average Tax Rate

The ratio of the total amount of taxes paid to the taxpayer's total taxable income.