To Predict the Effects of a Tax Cut on Consumption

question 94

Multiple Choice

To predict the effects of a tax cut on consumption spending, economists must have some estimate of the

• A)income effect.
• B)substitution effect.
• C)relative price effect.
• D)marginal propensity to consume.

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Definitions:

Food-deprived Rats

A condition used in experiments where rats are not given food for a period of time to study the effects of hunger on behavior and physiology.

Lever

A simple mechanical device consisting of a rigid bar that pivots on a fixed point, used to apply force and move an object at one end by applying force to the other.

Fixed-interval

In the context of psychology, it refers to a schedule of reinforcement where the first response is rewarded only after a specified amount of time has elapsed.

Reinforcement Schedule

A pattern that defines how often a desired response will be reinforced, crucial in the process of behavioral conditioning.