Which of the Following Is TRUE of the Difference Between

question 88

Multiple Choice

Which of the following is TRUE of the difference between a tax cut and a tax rebate?

• A) A tax cut only increases the incentive to spend, while a tax rebate only increases the incentive to work.
• B) A tax cut only increases the incentive to work, while a tax rebate only increases spending.
• C) A tax cut increases the incentive to work and the incentive to spend, while a tax rebate only increases the incentive to spend.
• D) A tax cut only increases the incentive to spend, but a tax rebate increases the incentive to work and the incentive to spend.

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Definitions:

Perfect Market System

A market structure characterized by an ideal scenario where there are many buyers and sellers, all having perfect information and no transaction costs, leading to efficient pricing.

Utility Function

A mathematical representation that describes the level of satisfaction or happiness that a consumer derives from consuming a set of goods and services.

Consumption

The act of using goods and services to satisfy needs or desires.

Price

The financial valuation expected, obligatory, or handed in exchange for something.