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:

Growing Annuity

A financial term that refers to a series of cash flows or payments that grow at a fixed rate per period.

Required Rate

Required Rate, or the minimum expected rate of return on an investment, reflects the investor's risk tolerance and investment criteria.

Cash Flow Growth

The increase in the amount of cash that a company generates over time.

Growing Annuity

A sequence of financial transactions increasing at a steady rate over a limited duration.