A Cut in Tax Rates Affects Equilibrium Real GDP Through

question 79

Multiple Choice

A cut in tax rates affects equilibrium real GDP through two channels: ________ disposable income and consumer spending, and ________ the size of the multiplier effect.

• A)decreasing; increasing
• B)decreasing; decreasing
• C)increasing; increasing
• D)increasing; decreasing

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Definitions:

Indebtedness

The state of owing money or being under financial obligation to another party.

Specific Assets

Assets clearly identified and defined, often mentioned in legal and financial documents, distinguishing them from general or unspecified assets.

Preferred Share

A type of stock that gives holders priority for dividend payments and assets in the event of a company's liquidation but typically does not have voting rights.

Par-value Share

A stock with a face value as specified in the corporate charter beyond which it cannot be sold upon initial offering.