Which of the Following Statements About Taxation Is Incorrect

question 56

Multiple Choice

Which of the following statements about taxation is incorrect?

• A)A tax cut affects aggregate demand indirectly.
• B)A tax cut raises income and expenditures.
• C)Cutting taxes by $20 is not the same as increasing government spending by $20.
• D)A change in taxes does not affect consumption.
• E)An increase in taxes decreases income and expenditures.

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Definitions:

Andesite

An intermediate-composition igneous rock that is the fine-grained equivalent of diorite; typically gray or greenish-gray, commonly with phenocrysts of cream-colored feldspar or dark amphibole.

Magma Chamber

A reservoir of molten rock beneath the surface of the Earth or a volcano.

Felsic Igneous Rock

Igneous rocks that are rich in silica and light in color, such as granite, characterized by minerals like quartz and feldspar.

Igneous Rock

A type of rock formed through the cooling and solidification of magma or lava, with examples including granite and basalt.