According to the Keynesian approach, a decrease in taxes
A) will decrease consumption, as the government will have to spend less.
B) will not impact consumption, as most consumption is autonomous.
C) will increase consumption exactly by the amount of the taxes.
D) will increase consumption by an amount of less than the change in taxes.
D
You might also like to view...
Which of the following statements is true?
A) For positive growth, consumption in an economy should always be less than savings. B) The greater the savings rate in an economy, the slower is the rate of capital accumulation. C) The greater the consumption expenditure in an economy, the faster is capital accumulation. D) Extremely high savings rate can be counterproductive for an economy in short term.
Which of the four types of economic decision makers is most important?
a. firms, because they produce all goods and services in the economy b. households, because they demand goods and services and supply resources c. government, because it ultimately sets and enforces the "rules of the game" d. government, because it steps in when there is market failure e. the rest of the world, because there are over 150 countries
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.
Suppose that televisions are produced both domestically and abroad. What would a ban on imported televisions do to the price of televisions, the quantity of televisions, and the output of the domestic television industry?
What will be an ideal response?