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.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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