If Congress Passed a One-Time Tax Cut in Order to Stimulate

question 59

Multiple Choice

If Congress passed a one-time tax cut in order to stimulate the economy in 2014,and tax rate levels returned to their pre-2014 level in 2015,how should this tax cut affect the economy?

• A)The tax cut would increase consumption spending less than would a permanent tax cut.
• B)The tax cut would increase consumption spending more than would a permanent tax cut.
• C)The tax cut would increase consumption spending by the same amount as would a permanent tax cut.
• D)The tax cut would raise the price level in 2014.

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Definitions:

Needs Categories

The classification of human necessities and desires into a hierarchy or specific groupings, such as Maslow's hierarchy of needs.

ERG Theory

A motivational theory developed by Clayton Alderfer that outlines three core human needs: Existence, Relatedness, and Growth.

Maslow's Needs

Maslow's Needs represent a hierarchy of human needs proposed by Abraham Maslow, which posits that people are motivated by unsatisfied needs, and certain lower needs need to be satisfied before higher needs can be addressed.

Employee Engagement

The emotional commitment the employee has to the organization and its goals, resulting in the use of discretionary effort in their work.