The supporters of a proposal to increase marginal taxes on those earning over $200,000 a year say this change would generate $100 billion in new tax revenues. A supply-side economist would argue that the actual revenue raised will be
A) exactly $100 billion because there are no offsetting factors to a tax increase.
B) more than $100 billion, because lower income people will work harder when they perceive the tax system to be fairer.
C) more than $100 billion because interest rates will also be affected.
D) less than $100 billion because some people will respond by working less.
D
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Explain how each of the following events would affect the long-run aggregate supply curve
a. A lower price level b. A decrease in the labor force c. A decrease in the quantity of capital goods d. Technological change
Everything else held constant, an increase in interest rates on student loans
A) increases the cost of a college education. B) reduces the cost of a college education. C) has no effect on educational costs. D) increases costs for students with no loans.