Only one answer. The effect on the economy of tax reduction and simplification i

ID: 1206390 • Letter: O

Question

Only one answer.

The effect on the economy of tax reduction and simplification is

A. an increase in the quantity of real GDP supplied at every price level, and a shift in the long-run aggregate supply curve.

B higher employment and real GDP but also a higher price level.

C. a decrease in consumption and investment spending, and a shift to the left of the aggregate demand curve.

D. a change in the costs to firms, as shown by the short-run aggregate supply curve shifting to the left marginal tax rate.

Option A as the cost to the firms will fall and there will be increase in quantity supplied at each price level.

Option B is not true as it rightward shift in the AS curve will lead to lower price level.

Option C is incorrect as tax reduction will increase consumption and investment.

Option D is incorrect as SRAS curve will shift to the right and not left due to tax reduction.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.