A $40 Billion Reduction in Taxes Increases Real GDP by $120

question 56

Multiple Choice

A $40 billion reduction in taxes increases Real GDP by $120 million. Assuming a constant price level,what does the tax multiplier equal?

• A) 3
• B) 4,800
• C) 30
• D) 160

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Definitions:

Lowest Volatility

The condition of experiencing the smallest degree of variation in price over a specified period, often sought after in stable investment options.

U.S. Dollar-Denominated Returns

The gains or losses on an investment reported in U.S. dollars, regardless of the currency of the initial investment.

Currency Selection Return

Currency Selection Return refers to the gains or losses resulting from the active management decision of choosing to invest in currencies expected to appreciate relative to others.

Cross Border Fund

An investment fund that has the capability to invest in financial assets across different countries.