Author Question: If Congress passed a one-time tax cut in order to stimulate the economy in 2014, and tax rate levels ... (Read 73 times)

theo · **on:** Jun 29, 2018

If Congress passed a one-time tax cut in order to stimulate the economy in 2014, and tax rate levels returned to their pre-2014 level in 2015, how should this tax cut affect the economy?

A) The tax cut would increase consumption spending more than would a permanent tax cut.
B) The tax cut would lower the price level in 2014.
C) The tax cut would increase consumption spending by the same amount as would a permanent tax cut.
D) The tax cut would increase consumption spending less than would a permanent tax cut.

Question 2

When Jack's income increases by 1,000, he spends an additional 850 dollars. This implies that his marginal propensity to save is 0.85.

Indicate whether the statement is true or false