An Increase in Consumer Saving Caused by a Tax Cut

question 50

Multiple Choice

An increase in consumer saving caused by a tax cut in savings by the government would:

• A)increase wealth.
• B)increase spending.
• C)increase interest rate.
• D)increase the supply of loanable funds and bring down interest rates.

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Definitions:

Cournot Model

A model of oligopoly in which firms choose their output levels simultaneously, assuming the output of the rivals as given, to maximize their own profit.

Collude

To come to a secret understanding for a harmful purpose; conspiracy between firms to fix prices or otherwise restrict competition.

Tacit Collusion

A situation where firms in a market understand each other's behaviors and outcomes without direct communication, leading to a form of non-competitive equilibrium.

Antitrust Laws

Legislation enacted to prevent new monopolies from forming and police those that already exist to protect consumers and ensure fair competition in the marketplace.