If Personal Income Tax Rates Are Decreased in an Attempt

question 166

Multiple Choice

If personal income tax rates are decreased in an attempt to stimulate spending, we should expect to see

• A)an increase in consumption and an increase in GDP.
• B)an increase in consumption and a decrease in GDP.
• C)a decrease in consumption and a decrease in GDP.
• D)a decrease in consumption and an increase in GDP.

---

Definitions:

Characteristics

Features or qualities that identify and distinguish an object, individual, or concept from others.

Bonds

Debt securities issued by corporations, governments, or other entities to investors, promising to repay the principal along with interest at a specified date.

Annual Market Rate

The interest rate applicable for a period of one year, often used in the context of loans, savings, or investments.

Present Value Tables

Tables that help in determining the present value of a future amount of money or stream of cash flows given a specific interest rate.