Assume the Economy Is in a Recession and the Federal

question 87

Multiple Choice

Assume the economy is in a recession and the federal government decides to cut personal income tax rates.All else equal,the cut in tax rates should

• A) shift the IS curve to the right and move the output gap closer to zero.
• B) shift the IS curve to the left and move the output gap farther away from zero.
• C) shift up the MP curve and move the output gap closer to zero.
• D) shift up the MP curve and move the output gap farther away from zero.

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Definitions:

Rational Economic Person

An individual who makes decisions by systematically and purposefully maximizing their utility from available choices, assuming full information and rationality.

Economic Assumption

A hypothesis about the economic environment in which a company operates, which can include factors like inflation rates, currency values, and market demand, used for financial planning and analysis.

Wealth Maximisers

Individuals or entities prioritizing activities and investments that aim to enhance their financial assets and wealth over time.

Accounting Policy

Distinctive postulates, grounds, methodologies, commands, and actions taken by an institution for the structuring and broadcasting of financial summaries.