An income tax hike ________ potential GDP by ________.
A. increases; not crowding out investment
B. decreases; limiting the use of discretionary monetary policy
C. increases; offsetting the Barro-Ricardo effect
D. decreases; decreasing the supply of labor
Answer:D
An income tax hike ________ potential GDP by ________.
A. increases; not crowding out investment B. decreases; limiting the use of discretionary monetary policy C. increases; offsetting the Barro-Ricardo effect D. decreases; decreasing the supply of labor