If Taxes Are Reduced with No Change in Government Spending

question 53

Multiple Choice

If taxes are reduced with no change in government spending, and people save all the money from the tax cut,

• A) the demand for loanable funds will increase and the interest rate will increase.
• B) the demand for loanable funds will increase and the interest rate will remain constant.
• C) the supply of loanable funds will increase and the interest rate will decrease.
• D) neither the demand nor the supply of loanable funds will change.

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Definitions:

Recreational Use

The use of substances or participation in activities for enjoyment, relaxation, or leisure, rather than for medical, professional, or survival purposes.

Labeling Theory

A sociological perspective that suggests individuals become deviant due to labels assigned to them by society.

Labeled As Deviant

The process of being marked by society as violating norms and engaging in behavior considered unacceptable.

Labels

Labels are terms or classifications applied to individuals or groups based on certain characteristics, often influencing perception and treatment by others.