A Tax-Cut Will Have a Greater Effect on Equilibrium GDP

question 95

Multiple Choice

A tax-cut will have a greater effect on equilibrium GDP if the:

• A) Marginal propensity to consume is smaller
• B) Marginal propensity to save is smaller
• C) Marginal propensity to save is larger
• D) Average propensity to consume is larger

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Assignment

The transfer of rights, property, or obligations from one party to another, often seen in contracts and legal agreements.

Notice

A formal communication or indication to someone about a fact, requirement, or intention.

Equitable Remedy

Remedies granted by courts in situations where monetary damages are inadequate, including injunctions and specific performance, based on principles of fairness.