An increase in taxes of a given amount will have a smaller impact on real GDP than a decrease in government purchases of equal amount because

A. tax increases reduce the incentive to spend and invest.
B. some of the additional tax will come from disposable income that would have been saved.
C. the decline in disposable income is less than the tax increases.
D. government purchases are subject to a larger multiplier than consumption purchases.


B. some of the additional tax will come from disposable income that would have been saved.

Economics

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The menu cost theory suggests that

A) wages and prices move freely and quickly. B) the economy is characterized only by perfect competition. C) there will be no unemployment. D) firms find frequent price changes to be costly.

Economics

Refer to Figure 11-3. Technological change is shown in the figure above by the movement from

A) B to E. B) B to A. C) B to C. D) B to D.

Economics

A linear demand for lake front cabins on a nearby lake is estimated to be: QD = 900,000 - 2P. What is the point price elasticity for lake front cabins at a price of P = $300,000? [HINT: Ep = (?Q/?P)(P/Q)]

a. EP = -3.0 b. EP = -2.0 c. EP = -1.0 d. EP = -0.5 e. EP = 0

Economics

The type of currency in circulation in the modern U.S. economy is almost entirely

a. commodity money. b. metallic money. c. fiat money. d. silver certificates.

Economics