The Permanent Income Hypothesis Implies That the Effect of a Temporary

question 88

Multiple Choice

The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity

• A) is greater than the effect of a permanent tax cut.
• B) is the same as the effect of a permanent tax cut.
• C) can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.
• D) is smaller than the effect of a permanent tax cut.

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Definitions:

Consolidated

Made stronger, more solid, or united; typically refers to the process of combining various elements into a single, coherent structure.

Short-Term Working Memory

A limited-capacity cognitive framework that temporarily preserves information for processing activities.

Episodic Memory

Episodic memory is the type of long-term, declarative memory that stores personal experiences and events, including the contexts and emotions associated with them.

Consciously Recalling

The deliberate process of bringing memories or information into awareness, an act of memory retrieval.