Answer to Question #113169 in Macroeconomics for zuks

Question

To boost economic growth the government is most likely to...
1.reduce personal income tax.
2.increase taxes.
3.provide incentives to save (e.g; tax-free investment)
4.increase minimum wages in the private sector.

Answer 1

The correct choice is (1) Reduce personal income tax.

A reduction in personal income tax increases the available disposable income within the economy, which in turn influence the total spending within the economy, thus influencing a boost of to the economic growth.