If Congress passed a one-time tax cut in order to stimulate the ...

[theo]

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

[fromAlphatoOmega22]

Answer to Question 1

D

Answer to Question 2

FALSE

[theo]

Excellent

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