The U.S. experience with tax cuts and tax increases since 1975 suggests that
a. tax cuts always stimulate consumption spending.
b. tax changes have a stable and predictable effect on consumption spending.
c. temporary tax changes are less effective than permanent changes.
d. tax changes have no effect on consumption spending.
c
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When the price of summer tank tops falls and you buy more of it because it is relatively less expensive, this is called
a) The substitution effect b) The income effect c) The net effect of both the substitution effect and the income effect d) The equilibrium choice for hours worked.
If the quantity of money demanded exceeds the quantity of money supplied, then the
A) equilibrium interest rate will decrease. B) equilibrium interest rate will increase. C) equilibrium interest rate stays the same. D) effect on the equilibrium interest rate is indeterminate.
The short-run Phillips curve is downward sloping because
A) the expected inflation rate is zero in the short run. B) the economy always returns to full employment. C) reducing the unemployment rate will reduce the inflation rate in the short run. D) in the long run, the expected inflation rate equals the actual inflation rate. E) the unemployment rate can be above or below the natural unemployment rate.
Tax revenue is greater the more price elastic the demand curve
Indicate whether the statement is true or false