The Keynesian Perspective on the Effect of an Increase in Taxes

question 260

Multiple Choice

The Keynesian perspective on the effect of an increase in taxes is that this policy action

• A) generates reductions in consumption and in saving.
• B) generates reductions in consumption and an increase in saving to pay for the new taxes.
• C) has no impact on consumption.
• D) increases current consumption and reduces future consumption.

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Definitions:

Two-Income Parents

Households where both parents are earners, contributing financially to the family's income.

Responsible Adult

An individual who is mature and capable of making informed decisions, often tasked with caring for or overseeing minors or dependent individuals.

Dual-Earner Couples

Partnerships where both individuals hold jobs and contribute financially to the household, which may involve navigating challenges with balancing work and family responsibilities.

Higher Salaries

Refers to income levels that are above the average or median for a particular job, industry, or region.