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One justification for a personal income tax cut is to increase the labor supply. Given that this policy will increase aggregate demand and supply, there will be an inflationary pressure if

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  1. 10 July, 09:45
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    Given that the policy of personal income tax cut is aimed at increasing the labor supply, which will increase aggregate demand and supply, there will be inflationary pressure if the aggregate demand for goods or services increases more rapidly than the aggregate that can be supplied.
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