The Tax Cuts and Entitlement Program Expansions of the 1980s

question 18

Multiple Choice

The tax cuts and entitlement program expansions of the 1980s led to such ________ federal deficits in the 1990s that fiscal policy ________ for smoothing-out business cycle fluctuations.

• A)small,again became the preferred tool
• B)small,was all but abandoned
• C)large,again became the preferred tool
• D)large,was all but abandoned

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Definitions:

Omission Bias

The tendency to favor inaction over action, based on the assumption that harm caused by doing nothing is less morally reprehensible than harm caused by acting.

Reactance

A psychological reaction that occurs when an individual feels their freedom to choose is being restricted, leading them to resist or do the opposite of what is being imposed.

Dissonance

A psychological conflict resulting from incongruous beliefs and attitudes held simultaneously.

Temporal Discounting

The tendency for people to value immediate rewards more highly than future rewards, often leading to impulsive decisions.