Which Is More Likely to Stimulate Aggregate Demand in a Timely

question 72

Multiple Choice

Which is more likely to stimulate aggregate demand in a timely manner?

• A) a tax cut, because households will increase their consumption by the full amount of their tax reduction
• B) a tax cut, because disbursement can take place quickly while spending increases are generally spread out over several years
• C) a spending increase, because disbursement can take place quickly while a tax cut will be spread out over several years
• D) a spending increase, because it can be easily reversed once the economy has recovered

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Definitions:

Aquifers

Underground layers of water-bearing permeable rock, rock fractures, or unconsolidated materials from which groundwater can be extracted using a water well.

Lakes

Large bodies of water surrounded by land, freshwater or sometimes saline, that are inland and not part of the ocean.

Rivers

Large natural streams of water flowing in channels to the sea, a lake, or another river.

Nonbiological Reservoirs

Natural or artificial environments that do not involve living organisms, which can store various substances or elements.