A Decrease in Taxes of a Given Amount Will Have

question 39

Multiple Choice

A decrease in taxes of a given amount will have a smaller impact upon the aggregate demand curve than will a rise in government purchases of the same amount because:

• A)the MPC is smaller in the private sector than it is in the public sector
• B)increases in government purchases always tend to reduce private investment
• C)aggregate demand is not affected by tax cuts
• D)some of the tax cut will not be spent
• E)exports rise with an increase in government purchases

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Definitions:

Hatshepsut

An 18th dynasty Pharaoh of Egypt who reigned during the early 15th century BC, one of the few female monarchs in ancient Egyptian history.

Royal Headdress

An ornate and often symbolic form of headgear worn by members of royalty as a sign of sovereignty and dignity.

Temple Complex

An area composed of one or more temples along with associated buildings, usually dedicated to a particular group of gods or a religious practice.

Karnak

A vast temple complex in Luxor, Egypt, renowned for its huge and intricately decorated structures, dedicated to the Theban triad of Amun, Mut, and Khonsu.