The Level of Crowding Out Associated with a Tax Cut

question 298

True/False

The level of crowding out associated with a tax cut will be smaller if the tax change has a supply-side effect than it will be if it only has a demand-side effect.

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Definitions:

Economic Downturn

A period of reduced economic activity characterized by declining GDP, falling incomes, and rising unemployment.

New Deal

Initiatives involving public works, financial reforms, and regulatory measures, launched by President Franklin D. Roosevelt in the 1930s in the United States, designed to assist in overcoming the effects of the Great Depression.

Moving Assembly Line

An innovation in manufacturing where products move from workstation to workstation where different tasks are performed until the product is completed.

Start-Up Manufacturers

Start-Up Manufacturers are new companies focused on the creation and production of goods, often characterized by innovative approaches and the overcoming of initial financial and market challenges.