The Keynesian Economists Do Not Believe That a Cut in the Marginal

question 5

Multiple Choice

The Keynesian economists do not believe that a cut in the marginal income tax rate will have strong effects on aggregate supply because they

• A)do not believe that business investment will respond strongly to changes in the after-tax rate of return to capital.
• B)do not believe that labor supply will respond strongly to changes in the after-tax real wage.
• C)do not believe that labor demand will respond strongly to a change in the after-tax real wage.
• D)believe monetary policy will be too restrictive to allow strong output growth.

---

Definitions:

Fair Value

The expected selling price for an asset or the amount needed to cover a liability, facilitated through a systematic deal between market participants on the specific date of measurement.

Qualitative Description

An explanation or characterization of something that focuses on its qualities and characteristics, rather than quantifiable measures.

Contingent Consideration

Usually, an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.