What will be the effect of a tax cut on consumption if consumption offers diminishing returns?
What will be an ideal response?
If consumption offers diminishing returns, consumers may hold back on spending their tax cuts. They will spread their spending over the long term rather than consuming the proceeds of the tax cut all at once. Thus, consumption may not increase immediately.
Economics
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Comment on the following statement: "Capital investment decisions always involve risk."
What will be an ideal response?
Economics
It is not legitimate to ask a question like,
A. "How is an exogenous variable affected by a change in an endogenous variable?" B. "What is the slope of the graph of the production function?" C. "What is the marginal product of labor?" D. "How is an endogenous variable affected by a change in an exogenous variable?"
Economics