If Households View a Tax Cut as Being Temporary, How

question 114

Multiple Choice

If households view a tax cut as being temporary, how does the tax cut affect aggregate demand?

• A) It has no effect on aggregate demand.
• B) It has a stronger effect on aggregate demand than if households view the cut as permanent.
• C) It has the same effect on aggregate demand than if households view the cut as permanent.
• D) It has a weaker effect on aggregate demand than if households view the cut as permanent.

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Definitions:

State Law

Laws enacted by individual states in the United States, as opposed to federal laws which apply to the entire country.

Surety-Guarantor Distinction

The difference lies in the obligations they undertake; a surety directly promises to be responsible for another's debt or performance, while a guarantor's liability arises if the primary obligor fails to perform.

State Statutes

Laws enacted by state legislatures that govern within the state's boundaries.

Mechanic's Lien

A legal claim against a property by a contractor or repair person for unpaid labor or materials.