Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts? a. Permanent tax cuts affect expectations of long-run income more than temporary tax cuts. b. Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function. c. Permanent tax cuts have a greater effect on expected long-run inflation. d. Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective.

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts? a. Permanent tax cuts affect expectations of long-run income more than temporary tax cuts. b. Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function. c. Permanent tax cuts have a greater effect on expected long-run inflation. d. Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Expectations Theory And The Economy

Section: Chapter Questions

Problem 10QP

See similar textbooks

Similar questions

During recessions, taxes tend to a. rise and thereby increase aggregate demand. b. fall and thereby decrease aggregate demand. c. fall and thereby increase aggregate demand. d. rise and thereby decrease aggregate demand.
A drop in the price level will have what effect in the aggregate demand model and the income-expenditure model?A.decreases aggregate demand and planned expenditures.B.increases aggregate demand, but decreases planned expenditures.C.decreases aggregate quantity demanded, but increases planned expenditures.D.increases aggregate quantity demanded and planned expenditures.
If the marginal propensity to consume (MPC) is 0.80, and if policy makers wish to increase real GDP $200 million, then by how much would they have to change taxes? A.decrease by $240 million. B.decrease by $160 million. C.decrease by $180 million. D.decrease by $50 million.
1.4. The deflationary gap in an economy is calculated to be $700 billion. The marginal propensity to save (MPS) is 0.1 The marginal propensity to import is (MPM) 0.15 The marginal rate of taxation is (MPT) 0.1. By how much would the government need change its spending on goods and services to eliminate the deflationary gap? 1.5. How does CHANGE in PRICES effect your lives? 1.6. Explain why INFLATION usually accelerates during wartime? Macroeconomics and the goals of Macroeconomic policy
How is it possible for the economy to have an inflationary gap? a. GDP is falling at full employment. b. Equilibrium is at a GDP level above full employment. c. GDP is rising at full employment. d. Equilibrium is at a GDP level below full employment. e. Equilibrium is at a GDP level equal to full employment.
Supply-siders argue that: a. reductions in government spending cut infrastructure investment which hurts private sector investment. b. increases in government spending increase infrastructure investment which helps private sector investment. c. increases in government spending causes private sector investment to fall because the government pushes up interest rates. d. reductions in government spending cause private sector investment to fall because the government pushes up interest rates by borrowing. e. increases in government spending causes consumption spending to fall because the government purchases push up interest rates.
Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. False
a. What is the equilibrium rate of real GDP? $ __ billion b. If full-employment real GDP is $800 billion, what problem does this economy have? multiple choice This economy has a recessionary gap. This economy has an inflationary gap. This economy does not have a problem. c. How large is the real GDP gap? $ __ billion
Assume the marginal propensity to consume is 0.8. To offset a fall in income of 1,000 the government should a. raise taxes by $250. b. increase government spending and taxes by 1,000. c. increase taxes by $200. d. cut taxes by $200.
7. If the government chooses to reduce government expenditure or to increase taxes, according to the Aggregate Supply-Aggregate Demand model: the price level will fall and GDP will increase. the price level will rise and GDP will increase. the price level will fall and GDP will decrease. the price level will rise and GDP will decrease.
The image attached, is a screen shot of the question. The question is: If the marginal propensity to consume was 0.8, low large would each of the following need to be in order to restore full-employment equilibrium? A. A tax increase ________billion B. A government spending cut $_________billion C. A cut in income transfers $________billion. I need to know how to figure this out. Again the screen shot of the question with the graph it attached.
If the government increases expenditures on goods and services and increases taxation by the same amount, which of the following will occur? A. Aggregate demand will be unchanged. B. Aggregate demand will increase. C. Interest rates will decrease. D. The money supply will decrease.

SEE MORE QUESTIONS

Recommended textbooks for you

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Macroeconomics

Economics

ISBN:

9781337617390

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Macroeconomics: Principles and Policy (MindTap Co…

Economics

ISBN:

9781305280601

Author:

William J. Baumol, Alan S. Blinder

Publisher:

Cengage Learning

MACROECONOMICS

Economics

ISBN:

9781337794985

Author:

Baumol

Publisher:

CENGAGE L

Economics (MindTap Course List)

Economics

ISBN:

9781337617383

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Macroeconomics

Economics

ISBN:

9781337617390

Author:

Roger A. Arnold

Publisher:

Cengage Learning

Macroeconomics: Principles and Policy (MindTap Co…

Economics

ISBN:

9781305280601

Author:

William J. Baumol, Alan S. Blinder

Publisher:

Cengage Learning

MACROECONOMICS

Economics

ISBN:

9781337794985

Author:

Baumol

Publisher:

CENGAGE L

SEE MORE TEXTBOOKS

GET THE APP

About FAQ Academic Integrity Sitemap Document Sitemap

Contact Bartleby Contact Research (Essays)High School Textbooks Literature Guides Concept Explainers by Subject Essay Help Mobile App

GET THE APP

Privacy

Your CA Privacy Rights

Your NV Privacy Rights

About Ads

Manage My Data

bartleby, a Learneo, Inc. business

	a.	Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.
	b.	Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function.
	c.	Permanent tax cuts have a greater effect on expected long-run inflation.
	d.	Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective.