If Households View a Tax Cut as Temporary, Then the Tax

question 56

Multiple Choice

If households view a tax cut as temporary, then the tax cut

• A)has no effect on aggregate demand.
• B)has more of an effect on aggregate demand than if households view it as permanent.
• C)has the same effect as when households view the cut as permanent.
• D)has less of an effect on aggregate demand than if households view it as permanent.

---

Definitions:

Collateral

An asset pledged as security for the repayment of a loan, forfeitable in case of default.

Franchising

A method of expanding a business and distributing goods and services through a licensing relationship.