The Effect of a Change in Taxes Is Less Than

question 317

Multiple Choice

The effect of a change in taxes is less than the same sized change in government expenditures because

• A) tax rates are the same regardless of income levels.
• B) the amount by which taxes change is affected by the MPC.
• C) changes in government expenditure do not directly affect consumption.
• D) the amount by which consumption initially changes is the MPC times the tax change.

---

Definitions:

Sunny Climate

A climate characterized by high levels of sunshine and warm temperatures, often associated with positive mental health and leisure activities.

Travel Agent

A professional who arranges and sells transportation and lodging for travelers, often including additional services and itinerary planning.

Under Construction

Refers to a building or site that is currently in the process of being constructed or developed.

Agency Relationship

A legal arrangement in which one party, the agent, is authorized to act on behalf of another party, the principal, in business transactions.