Author Question: What will be the effect of a tax cut on consumption if consumption offers diminishing returns? ... (Read 57 times)

Collmarie

  • Hero Member
  • *****
  • Posts: 569
What will be the effect of a tax cut on consumption if consumption offers diminishing returns?
 
  What will be an ideal response?

Question 2

Which of the following is NOT included in the money supply when the transactions approach is used?
 
  A) currency B) traveler's checks
  C) money market deposit accounts D) transaction deposits



macmac

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

If consumption offers diminishing returns, consumers may hold back on spending their tax cuts. They will spread their spending over the long term rather than consuming the proceeds of the tax cut all at once. Thus, consumption may not increase immediately.

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

The lipid bilayer is made of phospholipids. They are arranged in a double layer because one of their ends is attracted to water while the other is repelled by water.

Did you know?

The calories found in one piece of cherry cheesecake could light a 60-watt light bulb for 1.5 hours.

Did you know?

This year, an estimated 1.4 million Americans will have a new or recurrent heart attack.

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

Increased intake of vitamin D has been shown to reduce fractures up to 25% in older people.

For a complete list of videos, visit our video library