If Households View a Tax Cut as Temporary, Then the Tax

question 175

Multiple Choice

If households view a tax cut as temporary, then the tax cut

• A)has no affect on aggregate demand.
• B)has more of an affect on aggregate demand than if households view it as permanent.
• C)has the same affect as when households view the cut as permanent.
• D)has less of an affect on aggregate demand than if households view it as permanent.

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Definitions:

Weber's Law

A principle in psychology that states the change required to notice a difference between two stimuli is proportional to the original intensity of the stimulus.

Sensory Adaptation

This refers to the reduction in sensitivity to a stimulus after constant exposure to it.

Sleep Deprivation

A condition resulting from not getting enough sleep, which can affect mental, physical, and emotional health.

Neutral Object

An object that initially produces no specific response until it is associated with a meaningful stimulus through classical conditioning.