Aggregate Response to Two Significant, but Temporary, Tax Adjustments Made

question 34

Multiple Choice

Aggregate response to two significant, but temporary, tax adjustments made in the United States during the late 1960s and early 1970s suggests a marginal propensity to consume for temporary changes in income

• A) larger than the "Keynesian" long-run estimate of 0.94.
• B) so far below the "Keynesian" long-run estimate of 0.94 that the forward- looking theoretical prediction of 0.05 to 0.1 is validated.
• C) below the "Keynesian" estimate of 0.94 but above the theoretical predictions of 0.05 to 0.1.
• D) that validates the applicability of the "Keynesian" long-run estimate of 0.94 for analyses of short-run phenomena.
• E) identical to the forward-looking theoretical prediction of 0.16.

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Definitions:

Accounting System

A structured process of collecting, recording, summarizing, and reporting financial transactions of a business or individual.

Correct Order

The proper sequence or arrangement of steps or stages.

Computerized Accounting Systems

Accounting systems that use computer software to record, store, and analyze financial data, improving accuracy and efficiency over traditional manual record-keeping methods.

Accounting System

The system of recording and summarizing business transactions and analyzing, verifying, and reporting the results.