If Congress Passed a One-Time Tax Cut in Order to Stimulate

question 64

Multiple Choice

If Congress passed a one-time tax cut in order to stimulate the economy in 2010,and tax rate levels returned to their pre-2010 level in 2011,how should this tax cut affect the economy?

• A) Households on average would save an amount equal to the tax cut.
• B) The tax cut would stimulate spending by households.
• C) The tax cut would shift the aggregate demand curve to the right.
• D) The tax cut would raise the price level in 2010.

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