Compared to a Reduction in Tax Rates, a One-Time Tax

question 3

Multiple Choice

Compared to a reduction in tax rates, a one-time tax rebate will exert

• A) a weaker impact on aggregate demand because the increase in the incentive to earn and impact on long-term income will be smaller for the temporary tax cut.
• B) a stronger impact on aggregate demand because both the increase in the incentive to earn and impact on long-term income will be larger for the temporary tax cut.
• C) an identical impact on aggregate demand because the size of the budget deficit will be the same regardless of whether the tax cut is temporary or permanent.
• D) an identical impact on  aggregate demand because the incentive effects of a tax cut will be the same regardless of whether it is temporary or permanent.

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Definitions:

Sustainable Tourism

The practice of recreational traveling in a way that maximizes the social and economic benefits to the local community and minimizes the negative impact on cultural heritage and the environment.

Cultural Heritage

Refers to the legacy of physical artifacts and intangible attributes of a group or society that are inherited from past generations, preserved in the present, and bestowed for the benefit of future generations.

Recreational Traveling

Travelling undertaken for pleasure and enjoyment, as opposed to business or practical reasons, often involving exploring new places and experiences.

Eco-branding Strategy

A marketing approach that emphasizes environmental sustainability and eco-friendly practices as part of a brand's identity.