Question

Identify the true, false, and uncertain arguments. Economists that favor tax cuts recommend them as a first line of defense during recessions. During the 2008-2009 downturn, the Fed favored monetary policy over fiscal policy In 2009, economists in the Obama administration estimated that the tax cuts multiplier was lower than the multiplier of government purchases Critics of government spending hikes worry about the additional savings brought about by tax cuts The 2008-2009 downturn would have been worse if there had been no stimulus package Because investment is the most volatile element of the GDP, investment tax credit expansions give additional stimulus to aggregate supply. Answer Bank falsetrue uncertain

Answer 1

1. True. because during recessions, with the tax cut consumers would save for consumption

2. True. The federal government passed several stimulus packages to increase the amount of federal dollars flowing into the economy.

3. True. Because decrease in taxes will be saved by households without spending and some portion will be spent on imported goods.

4. True

5. True, because with the government spending it easend the burden on banks and brought back the confidence in customers.

6. True, with the investment tax credit expansions it would help to produce more which would create increased supply