A reduction in the tax rates may not stimulate the economy if:A. The tax cut is temporary and does not change permanentdisposable income.B. The tax cut is permanent and raises permanent disposableincome.O C. Consumption decisions are based solely on current income asopposed to permanent income.D. The tax cut is too large.E. The tax cuts are distributed evenly throughout the population inthe economy.

Disosable income refers to the amount of income people have remaining after payment of taxes. A…

A reduction in the tax rates may not stimulate the economy if: A. The tax cut is temporary and does not change permanent disposable income. B. The tax cut is permanent and raises permanent disposable income. C. Consumption decisions are based solely on current income as opposed to permanent income. D. The tax cut is too large. O E. The tax cuts are distributed evenly throughout the population in the economy.

A reduction in the tax rates may not stimulate the economy if: A. The tax cut is temporary and does not change permanent disposable income. B. The tax cut is permanent and raises permanent disposable income. C. Consumption decisions are based solely on current income as opposed to permanent income. D. The tax cut is too large. O E. The tax cuts are distributed evenly throughout the population in the economy.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterD: The Expenditure-output Model

Section: Chapter Questions

Problem 24CTQ: Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on...

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