A Tax Cut Has a Smaller Impact on Aggregate Demand

question 99

Multiple Choice

A tax cut has a smaller impact on aggregate demand than an increase in government purchases of the same size because

• A)A portion of the tax cut is invested.
• B)A portion of the tax cut is saved.
• C)Tax cuts do not increase disposable income.
• D)The tax cut multiplier is equal to 1.

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Definitions:

Image Restoration

Refers to the process of repairing or improving the reputation and the perception of an individual or an organization following damage or deterioration.

Government Initiated

Actions or policies that are started or introduced by government agencies or authorities to address specific issues or promote public welfare.

Social Responsibility

The obligation of organizations and individuals to act for the benefit of society at large.

Public Diplomacy

A process wherein governments communicate and build relationships with foreign publics to achieve their political and diplomatic objectives.