When the government levies a $100 million tax on people's income and puts the $100 million back into the economy in the form of a spending program, such as new interstate highway construction, the:
A. tax, then, generates a $100 million decline in real GDP.
B. level of real GDP expands by $100 million.
C. effect on real GDP is uncertain.
D. tax multiplier overpowers the income multiplier, triggering a rollback in real GDP.
Answer: B
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