The tax multiplier is negative because
A) tax rates are inversely related to tax revenues.
B) taxes always have a negative impact on the economy.
C) increases in taxes decrease disposable personal income and lead to a reduction in consumption spending.
D) increases in consumption spending have a negative impact on tax revenues.
C
You might also like to view...
Macroeconomic topics do not usually include: a. the rate of inflation
b. the rate of unemployment. c. economic growth. d. the profit maximizing decisions of an individual firm.
Suppose that the market for engagement rings is in equilibrium. Then political unrest in South Africa shuts down the diamond mines there. South Africa is the world's primary supplier of diamonds. What will happen?
A. The supply of engagement rings will increase. B. The equilibrium quantity of engagement rings will decrease. C. The demand for engagement rings will decrease. D. The equilibrium price of engagement rings will decrease.
In the figure above, assuming that the firm does not shut down, it will charge a price of
A) $1. B) $2. C) $3. D) $4.
If all firms are paying efficiency wages and nominal aggregate demand falls, then between maintaining nominal wages and reducing them firms generally find it more profitable to ________ them, thus ________ the unemployment rate
A) maintain, increasing B) maintain, maintaining C) reduce, increasing D) reduce, maintaining