Why is the tax multiplier smaller than the government spending multiplier?
The tax multiplier is smaller than the government spending multiplier because government spending has a direct impact on aggregate demand, while a tax cut has only an indirect impact on aggregate demand. Consumers will save some of their income from the tax cut.
You might also like to view...
Despite saving Lehman Brothers from failing, the Fed and the Treasury decided to allow Bear Stearns to go bankrupt, which it did in September, 2008
Indicate whether the statement is true or false
Which of the following people would be included in the calculation of the civilian labor force?
a. Adriana, a 17-year-old high school graduate who is looking for her first job b. Khadija, a retiree who occasionally does volunteer work at the local library c. Simen, an accountant who is currently serving a prison sentence for embezzlement d. Lorn, a Marine Corps sergeant who works full time at 29 Palms, California
Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1.MuffinsPer DayMarginal UtilityPer MuffinDoughnutsPer DayMarginal UtilityPer Doughnut140220230415320510If Jamie consumes 3 muffins a day, then what is her marginal utility per dollar spent on the third muffin?
A. 30 B. 20 C. 10 D. 40
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The best point for society would be
A. either Point B or Point C, as the total amount being produced at either of these points is approximately the same. B. at any of the labeled points, as all of the points represent an efficient allocation of resources. C. Point C, as at this point there are approximately equal amounts of LCD and OLED televisions being produced. D. indeterminate from this information, as we don't have any information about the society's desires.