How Is Aggregate Expenditure Affected When Net Taxes Are Cut

question 94

Multiple Choice

How is aggregate expenditure affected when net taxes are cut?  

• A) Government purchases fall. 
• B) Government purchases rise. 
• C) Consumption falls. 
• D) Consumption rises.

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Definitions:

Price Decline

A decrease in the market price of an asset or security over a certain period.

Zero-Coupon Bond

A bond that does not pay periodic interest payments and is issued at a discount to its face value, which is paid at maturity.

Annual Coupon Bond

A type of bond that pays interest to the bondholder on an annual basis.

Portfolio Value

The total worth of all the financial assets held in an investment portfolio, which can vary over time based on market conditions.