When the Crowding-Out Effect of a Decrease in Taxes Is

question 22

Multiple Choice

When the crowding-out effect of a decrease in taxes is included in the analysis,what is the effect on AD?

• A)AD doesn't change.
• B)AD shifts right.
• C)Any change in AD is indeterminate.
• D)AD shifts left.

---

Definitions:

Slamming

The illegal practice of changing a consumer’s telephone service without permission.

Limited Warranties

Warranties that cover only certain parts, certain defects, or have other specific limitations established by the seller.

Used Car Dealers

Businesses specialized in selling pre-owned vehicles to consumers.

Strict Liability

The doctrine under which people may be liable for injuries to others whether or not they have been negligent or committed an international tort. Also called absolute liability.