Suppose the government provides a tax cut today that is matched by a tax increase in the future that's equal in present value to the tax cut. This causes a consumer's saving to
A. increase.
B. remain unchanged.
C. decrease.
D. increase if the person was a lender and decrease if the person was a borrower.
Answer: A
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Money is still useful during times of inflation because
A) it still retains the characteristic of predictability of value. B) its opportunity cost falls as inflation rises. C) more money can be made so people can still purchase the goods and services they want. D) it is not a liquid asset.
When the Fed lowers the federal funds rate and the real interest rate falls, what happens to the opportunity cost of investment? What happens to investment?
What will be an ideal response?
MoneyMinds Inc, a finance company, wants to reduce its cost. The CEO was against firing employees and suggested that instead they could reduce the salary of each employee. However, soon after the mandate was approved, most of the productive workers started resigning. The can be explained by the _____
a. efficiency wage theory b. insider-outsider model c. adverse selection of wage cuts argument d. relative wage coordination argument
Three possible reasons for an above-equilibrium wage are minimum-wage laws, unions, and efficiency wages
a. True b. False Indicate whether the statement is true or false