Which of the following is true about the effect of a tax cut on consumption? a- It would increase consumption by exactly one monetary unit. b- It...
Which of the following is true about the effect of a tax cut on consumption?
a- It would increase consumption by exactly one monetary unit.
b- It would increase consumption by less than one monetary unit.
c- It would increase consumption by more than one monetary unit.
d- It would have no effect on the level of consumption.
e- It would lead to a decline in the level of consumption.
a- It would increase consumption by exactly one monetary unit.
b- It would increase consumption by less than one monetary unit.
c- It would increase consumption by more than one monetary unit.
d- It would have no effect on the level of consumption.
e- It would lead to a decline in the level of consumption.
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Ed 
The correct answer is: a- It would increase consumption by exactly one monetary unit. A tax cut would provide individuals with more disposable income, which would likely lead to an increase in consumption. However, the exact amount by which consumption would increase cannot be determined solely based on the information provided.
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