If Wealthy U

question 59

Multiple Choice

If wealthy U.S.consumers save most of their tax cut, this means that, compared to government spending changes,

• A)tax changes would have a higher multiplier effect.
• B)tax changes would have a weaker multiplier effect.
• C)government spending would have a weaker multiplier effect.
• D)U.S.consumers would spend all of their tax cut.

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Definitions:

Interest Rate

The portion of a total amount of money that is required as payment for borrowing it, typically expressed on a yearly basis.

Compounded Annually

A method where interest is calculated on the initial principal and also on the accumulated interest of previous periods, applied once a year.

Post-secondary Education

Education that takes place after high school, including college, university, and vocational training.

Trust Fund

A fund comprised of assets, such as stocks, bonds, property, or cash, held in a trust and managed by a trustee for the benefit of someone else.