:= Question Help Read the news clip, then answer the following question. John Mc

Question

:= Question Help Read the news clip, then answer the following question. John McCain's Tax Policy John McCain thinks the U.S. economy the Laffer curve becausewould slash McCain wants to make the Bush tax cuts permanent, then cut taxes further. He would slash the corporate tax, double the child-care tax credit, and allow businesses to write off the full cost of capital investments in one year. Despite these cuts, McCain insists that he can balance the budget within four years with promised savings from running a tighter ship and increased tax revenues as the economy expands. the cort fulil coast of capial investments with OA. to the right of the maximum of; tax revenue will not increase with a tax cut O B. to the left of the maximum of; tax revenue will not increase with a tax cut O C. at the maximum of, the United States cannot benefit from either O D. not operating on; at points on the Laffer curve the government budget is until the economy expands until the economy expands increasing or decreasing the tax rate either balanced or in surplus Source: Fortune, July 7,2008

Explanation / Answer

1. The correct answer is A.

2.  The correct answer is D.

3. The impact of increasing unemployment benefits and not increasing the payroll tax will be that aggregate demand will increase and so the aggregate demand curve will shift rightwards.

The aggregate supply curve will shift rightwards as the unemployment benefits will rise but the payroll tax is not increased.

4. The correct answer is A.The US budget deficit is larger.

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