The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity
A. is the same as the effect of a permanent tax cut.
B. is greater than the effect of a permanent tax cut.
C. is smaller than the effect of a permanent tax cut.
D. can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.
Answer: C
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Majority of international migrants move to:
A. The U.S. and Canada B. Western Europe C. Countries relatively close to their home countries D. Japan and Australia
In which of the following ways do advertising and other selling costs affect a firm's cost curves?
i. Advertising expenditures increase total fixed costs. ii. Selling costs increase total fixed costs. iii. Advertising and other selling costs per unit of output decrease as output increases. A) i only B) i and ii C) iii only D) i and iii E) i, ii, and iii
Economy X has just one worker, while Economy Y has 100 workers. Both have the same capital and land resources and produce the same good. If labor specialization occurs in Economy Y, we would expect Economy Y to produce
a. exactly the same quantity of goods as Economy X b. 100 times the quantity of goods as Economy X c. less than 100 times the quantity of goods as Economy X d. more than 100 times the quantity of goods as Economy X e. more inefficiently than Economy X
An increase in capital formation that expands long-run aggregate supply will
a. increase output and decrease prices. b. increase both output and prices. c. decrease both output and prices. d. decrease output and increase prices.