When Consumers Lend at a Lower Rate Than They Borrow

question 3

Multiple Choice

When consumers lend at a lower rate than they borrow, a decrease in current taxes implies

• A)current consumption remains unchanged.
• B)current savings increases by the amount of the tax cut.
• C)both current and future consumption increase.
• D)current consumption increases by the amount of the tax cut.
• E)current consumption decreases and future consumption increases.

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Definitions:

Independent Contractors

Individuals or entities hired to perform work for another entity as non-employees, responsible for their own taxes and benefits.

Federal Statutory Law

Laws enacted by the United States Congress that must be followed by all states and citizens.

Independent Contractor

An individual or entity hired to perform a specific task or project yet maintains control over how the task is carried out, distinguishing them from employees.

Agency Law

Governs the relationship between individuals or entities (agents) who agree to act on behalf of another (principal) for certain activities.