Question

Some economists believe that permanently lower marginal income tax rates __________ the incentive to work and thus shift the __________. Question 21 options: increase; LRAS curve to the right increase; AD curve to the right increase; SRAS curve to the left decrease; LRAS curve to the right decrease; AD curve to the left

Answer 1

The answer is "increase; LRAS curve to the right".

Step-by-step explanation:

The curve LRAS represents the flow between all the level of wages and economic GDP supplied because all prices are fully flexible, also with nominal salaries; its cost may change all along LRAS, however, the output cannot, as it represents the complete output of workers, that's why the several economists say that lower marginal rate consistently increases the motivation to work, shifting the LRAS curve to the left.