According to the Traditional View of Government Debt, If Taxes

question 56

Multiple Choice

According to the traditional view of government debt, if taxes are cut without cutting government spending, then the long-run effects will be ______ steady-state capital and ______ consumption.

• A) higher; higher
• B) lower; lower
• C) higher; lower
• D) lower; higher

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Definitions:

Effect Uncertainty

involves the unpredictability surrounding the consequences or outcomes of a decision or action.

State Uncertainty

The condition of not knowing the true state of a system or environment, often due to insufficient information.

Economic Uncertainty

The unpredictability in economic conditions, which can include factors such as inflation rates, employment levels, and market volatility, affecting business and investment decisions.

Macro Uncertainty

The uncertainty that exists within the broad economy which can impact decision-making and future outcomes on a large scale.