An increase in the income tax rate in an attempt to decrease a country's debt-to-GDP ratio may not be effective because O a. It will reduce disposable income and consumption expenditure Ob. It will reduce firms expectations of growth in future sales All of the answers are correct O d. It will reduce investment in new capital stock

An increase in the income tax rate in an attempt to decrease a country's debt-to-GDP ratio may not be effective because O a. It will reduce disposable income and consumption expenditure Ob. It will reduce firms expectations of growth in future sales All of the answers are correct O d. It will reduce investment in new capital stock

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.A: Graphical Treatment Of Taxes And Fiscal Policy

Problem 2TY

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Question

An increase in the income tax rate in an attempt to decrease a country's debt-to-GDP ratio may not be effective because
O a.
It will reduce disposable income and consumption expenditure
O b. It will reduce firms expectations of growth in future sales
All of the answers are correct
O d. It will reduce investment in new capital stock

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