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
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
Problem 1DQ
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Transcribed Image Text: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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