Which of the following best explains why a $7 billion tax cut can lead to a $9 billion increase in consumer spending in the short run?

Answers

Answer 1

Below are the choices:

A. Tax cuts increase disposable income, which leads to a higher national income and additional consumer spending. 

B. Tax cuts reduce government spending, which encourages consumer spending. 

C. Tax cuts reduce interest rates, which stimulates consumer spending and borrowing. 

D. Tax cuts increase government transfer payments, which leads to a higher national income and additional consumer spending.

The answer is A. 
Also increases government revenue in the long run. Tax cuts increase consumer spending which creates growth, which creates more jobs (tax payers)

Related Questions

What might inspire a highly educated chinese scholar to compose such a flattering public tribute to a mongol official?

Answers

Final answer:

A highly educated Chinese scholar may compose a flattering tribute to a Mongol official to acknowledge the cultural exchange and to garner protection, patronage, and favor. Such actions could also be a strategic response to the Mongol's promotion of their own ethnicity and the placement of Chinese literati within the social hierarchy.

Explanation:

A highly educated Chinese scholar might be inspired to compose a flattering public tribute to a Mongol official for several reasons. During the Mongol rule in China, namely the Yuan dynasty, there was a certain level of cultural exchange and diplomatic relationships as the Mongols became more settled and cultivated in their role as rulers. This led to a blending of cultures and the establishment of international contacts, which scholars found beneficial.

Influential figures like Zheng He played key roles in fostering these relationships through their diplomatic missions, which included the exchange of luxurious gifts like silks and embroidered fine textiles in recognition of foreign dignitaries. Moreover, acknowledging the authority and benevolence of Mongol rulers publicly could bring certain advantages to scholars, including protection, sponsorships for their work, and gaining favor for their respective regions or causes. The legacy of great leaders like Chinggis Khan was respected, and drawing parallels between contemporary rulers and historical figures of valour could enhance the Mongol's prestige and possibly inspire the allegiance of subjects and tributary states.

Furthermore, the Mongols' policy of promoting their own kind and other non-Chinese foreigners above the ethnic Chinese population could have incentivized scholars to craft tributes that would place them in a more favourable light, given the rigid social stratification based on ethnicity during the Yuan era.

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