Income taxes cause _____

Classical economists believe that the economy tends naturally toward

a. full employment and zero inflation equilibrium without government interference b. zero unemployment and zero inflation as long as the Federal Reserve keeps interest rates low c. high unemployment unless the Federal Reserve constantly adjusts the money supply d. high inflation unless the government curbs its spending habits and cuts tax rates to spur economic activity e. monetary equilibrium as long as money velocity is less than one

Gross private domestic investment

a. excludes all investment in the United States by foreign firms. b. includes all capital in the United States. c. includes net additions to the capital stock plus all new corporate stocks and bonds. d. includes business expenditures on new factories, tools, and machinery.