A Reduction in the Net Tax Rate Might Lead to an Increase

question 32

Multiple Choice

A reduction in the net tax rate might lead to an increase in the growth rate of potential output if

• A)the simple multiplier is large.
• B)the tax cuts stimulate private investment.
• C)firms are operating at their normal capacity.
• D)households are not forward looking.
• E)the marginal propensity to consume is large.

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Definitions:

Magnesium Chloride

A chemical compound often used in de-icing, dust control, and as a magnesium supplement in agriculture and medicine.

Equilibrium Test

A diagnostic procedure used to assess the balance and coordination by evaluating the vestibular system, which includes parts of the inner ear and brain.

Vision

The ability to perceive and interpret the surrounding environment using light that enters the eyes.

Unsteadiness

The quality or condition of being unstable or lacking balance.