If Taxes Were a Lump-Sum Amount, Then the Absolute Value

question 358

Multiple Choice

If taxes were a lump-sum amount, then the absolute value of the tax multiplier ________ it would be if taxes depend on income.

• A) is smaller than
• B) is larger than
• C) is equal to what
• D) could be either larger than or smaller than

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Definitions:

Total Product

The total output of goods or services produced by a firm or economy, typically measured over a specific period.

Profit-Maximizing

The process or strategy of adjusting production and pricing to achieve the highest possible profit based on costs and market demand.

Derived Demand

is the demand for a product or service that arises from the demand for another product or service, such as the demand for steel being driven by the demand for cars.

Capital Demand

The desire or need for capital goods, such as machinery and tools, that are used to produce other goods and services.