If There Is a Decrease in Government Purchases Along with a Decrease

question 16

Multiple Choice

If there is a decrease in government purchases along with a decrease in the marginal tax rate on labour income, then:

• A)the income effect would be toward a decrease in labour supply.
• B)the overall effect on labour supply is negative.
• C)the substitution effect would be towards a decrease in labour supply.
• D)all of the above.

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Definitions:

Cash Payback Period

The time it takes for a business to recuperate its investment in a project, measured by the flow of cash into the organization.

Net Present Value Method

A method used to evaluate investments by calculating the difference between the present value of cash inflows and outflows over a period of time.

Average Rate

Typically refers to the mean value or norm of a variable rate over a specified period, such as interest rates or exchange rates.

Capital Investment Proposals

Plans or suggestions for allocating resources towards long-term assets in hopes of gaining future returns.