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:

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or project.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products.

Distribution Activities

The processes involved in making a product or service available for use or consumption by a consumer or business user.

Product

An item or service created through a process and offered to a market to satisfy a want or need.