Which of the Following Is Not a Valid Point in Debating

question 2

Multiple Choice

Which of the following is not a valid point in debating the merits of increasing government expenditures or cutting taxes during a recession?

• A)A cut in the marginal tax rate increases the incentives to find a job and work longer hours.
• B)Consumers will save a portion of a tax cut.
• C)The government may use the increase in expenditures on projects with little value,particularly if it wishes to respond quickly.
• D)There is no evidence that tax cuts have been followed by increases in economic growth.

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Definitions:

Deadweight Loss

An inefficiency in the economy caused by the lack of or inability to attain equilibrium in the market for a particular good or service.

Inelastic

Describing a situation where the demand or supply for a product does not significantly change in response to a change in price.

Excise Tax

A tax levied on specific goods, services, or transactions, often with the aim of reducing their consumption.

Producer Surplus

The distinction between the acceptable selling price for producers of a good or service and the actual price achieved.