A Temporary Tax Cut Is Not Likely to Be Effective

question 122

Multiple Choice

A temporary tax cut is not likely to be effective in stimulating aggregate demand if:

• A)the tax cut is large.
• B)the MPC is relatively high.
• C)the economy experiences a contractionary gap.
• D)the short-run aggregate supply curve is relatively flat.
• E)people based consumption decisions on their level of permanent income.

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Definitions:

Psychologists' Reaction

Refers to the response or feedback of psychologists towards a particular phenomena, study result, or psychological concept based on their professional expertise.

Jungian Concepts

Ideas developed by Carl Jung, a Swiss psychiatrist, which include theories of the collective unconscious, archetypes, individuation, and the psychological significance of dreams and symbols.

Introverted Feeling Types

Personality types characterized by deep emotional experiences, guided by internal values, and often kept private.

Extraverted Thinking Type

A personality disposition characterized by outwardly directed logical reasoning and decision-making.