Compared to a Permanent Reduction in Tax Rates, a Temporary

question 153

Multiple Choice

Compared to a permanent reduction in tax rates, a temporary tax cut will generally

• A) exert a larger impact on output and employment because its effects are immediate, long-lasting, and do not add much to the national debt.
• B) exert a smaller impact on output and employment because the temporary cut will not exert much impact on long-term income or the incentive to earn.
• C) exert a larger impact on output and employment because the temporary tax cut will lead to a larger budget deficit.
• D) exert an identical impact on output and employment because the incentive effects will be the same regardless of whether the tax cut is temporary or permanent.

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Definitions:

Throughput Time

The amount of time required for a product to pass through a manufacturing process from start to finish.

Throughput Time

The duration required to complete the manufacturing process of a single unit, including all stages of production from raw materials to finished goods.

Manufacturing Cycle Efficiency

A measure of the efficiency in manufacturing, calculated as the ratio of value-added production time to total cycle time.

Turnover

Refers to the total sales generated by a company during a specific period.