Which of the Following Is an Argument for Tax Cuts

question 81

Multiple Choice

Which of the following is an argument for tax cuts rather than government spending as a way to promote recovery from a recession?

• A) Tax cuts are better suited to direct resources into projects that consumers value more highly than the resources required for their production.
• B) 100 percent of a tax cut will stimulate aggregate demand, but this will not be the case for an increase in government expenditures.
• C) Tax cuts will encourage rent seeking; increases in government spending will not.
• D) Tax cuts will change the structure of aggregate demand more than increases in government spending.

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Definitions:

Psychodynamic

Refers to a psychological approach that emphasizes systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Humanistic

A psychological perspective that emphasizes the study of the whole person and the uniqueness of each individual's experience.

Behavioral

Pertains to the actions or reactions of a person or animal in response to external or internal stimuli.

Sociocultural

Pertaining to the combination of social and cultural factors and their influence on individual behavior and society.