For Each $1 of a Tax Cut, Economists Expect Consumption

question 88

Multiple Choice

For each $1 of a tax cut, economists expect consumption to

• A)decrease by $1.
• B)decrease by less than $1.
• C)increase by less than $1.
• D)increase by $1.

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Definitions:

Primary

Refers to first in order, importance, or original sources of information obtained directly from first-hand experience or research.

Economies of Scope

Cost advantages that a business experiences by producing a wider variety of products, rather than specializing in the production or provision of a single product or service.

Diseconomies of Scale

A point at which a company grows so large that the costs per unit increase with the increase in production.

Experience Curve Effects

The reduction in unit costs of production as output increases, typically due to gained efficiencies and learning over time.