Suppose Policy Makers, as Expected, Cut the Level of Taxes

question 45

Multiple Choice

Suppose policy makers, as expected, cut the level of taxes. Which of the following will occur as a result of this expected tax cut?

• A) An increase in stock prices.
• B) No change in stock prices.
• C) Stock prices decrease only if goods prices decrease.
• D) A decrease in stock prices.
• E) An ambiguous effect on stock prices.

---

Definitions:

Protocells

Simple, self-organized, prebiotic structures that mimic living cells, thought to be key in the origin of life.

Metabolic Reactions

Chemical reactions in living organisms that are necessary for the maintenance of the living state, including processes for assembly or breakdown of substances.

Molecule

The smallest unit of a chemical compound that can exist, consisting of two or more atoms bonded together.

Earth

The third planet from the Sun in our solar system, home to diverse ecosystems and the only known place in the universe supporting life.