One Argument in Favour of Tax Cuts Over Spending-Based Fiscal

question 46

Multiple Choice

One argument in favour of tax cuts over spending-based fiscal stimulus is that:

• A)tax cuts increase the MPC by a larger amount than government spending.
• B)tax cuts temporarily increase planned spending, but government spending permanently increases private spending.
• C)in theory the tax multiplier is larger than the government spending multiplier.
• D)historically tax cuts have been more successful than spending-based fiscal stimulus.