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:

Diagnosed

The process of identifying a disease or condition from its signs and symptoms by a health professional.

Increasing Proportion

A term related to the growing ratio or fraction of one quantity compared to another.

Psychologically Disordered

Pertaining to conditions characterized by abnormal thoughts, feelings, or behaviors that may cause distress or impairment in functioning.

Deviant

Refers to behaviors or actions that deviate from the societal norms or expectations.