Which of the Following Is Correct

question 10

Multiple Choice

Which of the following is correct?

• A)Well designed tax cuts can increase investment which fluctuates more than consumption over the business cycle.
• B)Well designed tax cuts can increase investment but it fluctuates less than consumption over the business cycle.
• C)Tax cuts have little effect on investment which fluctuate more than consumption over the business cycle.
• D)Tax cuts have little effect on investment but it fluctuates less than consumption over the business cycle

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Definitions:

Investment

Assets purchased with the expectation that they will generate income in the future or appreciate in value.

Semiannually

Occurring twice a year, typically every six months.

Annual Return

This measures the financial gain or loss of an investment over a one-year period, expressed as a percentage of the investment's initial cost.

Investment

Items acquired with the hope that they will produce earnings or increase in value over time.