Question

If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium _____. rev: 06_12_2018 Multiple Choice output would necessarily rise output would necessarily fall price level would necessarily fall price level would necessarily rise

Answer 1

Answer:

output would necessarily rise.

Explanation:

Tax is the amount that a government levies on its citizens to fund it's expenditure, and for the individual income tax is levied.

If the government decides to reduce personal tax, this will free up funds to engage in economic activities and make resources more productive. The individual's disposable income will increase and when invested in business activities to promote productivity.

Increased productivity will necessarily increase the output from the economy.