In Which of the Following Situations Would the Multiplier Effect

question 33

Multiple Choice

In which of the following situations would the multiplier effect on a country's economy of a tax cut implemented by that country's government be greatest?

• A) The country is very open to international trade and imports are high relative to GDP.
• B) The country's citizens are affluent and tend to save a relatively high proportion of their income.
• C) The country's citizens have relatively low incomes and spend little on foreign holidays or imported goods.
• D) The country's citizens are cautious and sceptical, leading them to assume that the tax cut will soon be reversed.

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Definitions:

Skewed

Describing a distribution that is not symmetrical, where one tail is longer or fatter than the other, indicating a deviation from the normal distribution.

Median Number

The middle value in a list of numbers, which separates the higher half from the lower half.

Mean Salary

The average income of individuals in a specific group, taking the sum of all salaries and dividing by the number of individuals.

Mean Number

The average value in a set of numbers, calculated by summing all numbers and dividing by the count of the numbers.