Compared to a reduction in tax rates, a one-time tax rebate will exert
a. a weaker impact on aggregate demand because the increase in the incentive to earn and impact on long-term income will be smaller for the temporary tax cut.
b. a stronger impact on aggregate demand because both the increase in the incentive to earn and impact on long-term income will be larger for the temporary tax cut.
c. an identical impact on aggregate demand because the size of the budget deficit will be the same regardless of whether the tax cut is temporary or permanent.
d. an identical impact on aggregate demand because the incentive effects of a tax cut will be the same regardless of whether it is temporary or permanent.
A
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Suppose a tax is implemented to fund low-income housing. Which principle of taxation is most appropriate as a guide to evaluating the tax?
a. the benefit principle b. the ability-to-pay principle c. a combination of the benefit principle and the ability-to-pay principle d. the mobility principle
Revenue for state and local governments is mainly sourced from: a. personal income taxes
b. sales and property taxes. c. corporate income taxes. d. license fees.