If personal taxes are cut temporarily, the resulting
A. increase in personal saving would be larger than if they were cut permanently.
B. decrease in personal saving would be larger than if they were cut permanently.
C. decrease in personal saving would be smaller than if they were cut permanently.
D. increase in personal saving would be smaller than if they were cut permanently.
Answer: D
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Assume the most typical shapes for the demand and supply in a competitive market. Suppose that demand falls and supply increases. Which of the following statements is correct?
a. The equilibrium price will fall; the equilibrium quantity may rise or fall. b. The equilibrium price will rise; the equilibrium quantity may rise or fall. c. The equilibrium quantity will fall; the equilibrium price may rise or fall. d. The equilibrium quantity will rise; the equilibrium price may rise or fall. e. The equilibrium price will fall; the equilibrium quantity will not change.
Rebecca and Leah are roommates. Rebecca likes to study with the music playing loudly and Leah needs quiet when she studies. Rebecca would be willing to pay $5 a night to hear music while Leah would be willing to pay $10 a night for the quiet. In this situation
a. Leah should pay Rebecca $7.50 a night to not listen to music, because that would be a Pareto improvement b. Rebecca should stop listening to music because that would be a Pareto improvement c. There is no action that would create a Pareto improvement d. Rebecca should pay Leah $7.50 a night to listen to music, because that would be a Pareto improvement e. Leah should pay Rebecca $4.50 a night to not listen to music, because that would be a Pareto improvement