Which of the Following Is an Argument for Tax Cuts

question 81

Multiple Choice

Which of the following is an argument for tax cuts rather than government spending as a way to promote recovery from a recession?

• A) Tax cuts are better suited to direct resources into projects that consumers value more highly than the resources required for their production.
• B) 100 percent of a tax cut will stimulate aggregate demand, but this will not be the case for an increase in government expenditures.
• C) Tax cuts will encourage rent seeking; increases in government spending will not.
• D) Tax cuts will change the structure of aggregate demand more than increases in government spending.

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Definitions:

Resting Potential

The electrical charge of a neuron when it is not active, providing the cell with a ready state from which it can activate.

Reuptake

A process by which neurotransmitters are absorbed back into the nerve cell after being released into the synaptic cleft.

Polarization

A process by which differences between opposing viewpoints or factions become more extreme, leading to increased conflict and division.

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's "fight or flight" response during stress.