A Temporary Tax Cut Would Not Be Effective in Stimulating

question 135

Multiple Choice

A temporary tax cut would not be effective in stimulating aggregate demand if

• A)the tax cut were large
• B)the MPC were relatively high
• C)the economy were in a contractionary gap
• D)the short-run aggregate supply curve were relatively flat
• E)people based consumption decisions on their level of permanent income

---

Definitions:

Functional Risk

The potential for a product or service to fail to perform its intended function, causing inconvenience or loss to the user.

Directed Learning

A form of learning where the objectives and the process are defined and structured by instructors, teachers, or educational systems.

Actual State-Need

The current condition of an individual that prompts a recognition of a need, leading to a decision-making process to fulfill that need.

Marketing Promotions

Activities or campaigns designed to increase consumer awareness or demand for a product or service, often through advertisements or special offers.