Suppose There Are Two Policy Options Facing a Vote in the Senate

question 236

Multiple Choice

Suppose there are two policy options facing a vote in the Senate. In the first, government spending will increase $50 billion, while the second option is to cut taxes by $50 billion. A Keynesian economist would argue for

• A)the tax option because it also affects the incentives workers face. Long-run aggregate supply will increase with the tax cut, but not with the spending increase.
• B)the tax option because it is easier to pass. The effects on total spending would be identical.
• C)the spending option because it won't affect the deficit the way the tax cut would.
• D)the spending option because it has a bigger impact on total spending. The spending directly raises total spending plus it works through the multiplier, while the tax cut only works through the multiplier.

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Definitions:

Systematic Desensitization

A therapeutic technique used to reduce phobia or anxiety through gradual exposure to the feared object or situation.

Enclosed Space

A physical area that is surrounded by boundaries which can be natural or man-made, limiting access and egress.

Psychotherapist

A professional who treats mental health issues by psychological rather than medical means, often through talking therapies.

Clinical Setting

A healthcare environment where patients receive treatment and care from medical professionals.