Suppose the Government Increases Taxes

question 113

Multiple Choice

Suppose the government increases taxes. One effect of this change is that it decreases

• A) the size of the government expenditure multiplier.
• B) disposable income, which decreases consumption expenditure and aggregate demand.
• C) government expenditure, which decreases aggregate demand.
• D) disposable income which then decreases aggregate supply.

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Definitions:

Jointly Liable

A legal term indicating that two or more parties are equally responsible for the fulfillment of a liability or debt.

UPA

stands for Uniform Partnership Act, which is a set of laws adopted by some states in the United States to govern the formation, operation, and dissolution of partnerships.

RUPA

The Revised Uniform Partnership Act, which is a set of laws aiming to govern the operation of partnerships within the United States.

Limited Liability Partnership (LLP)

A partnership in which some or all partners have limited liabilities, protecting them from personal responsibility for the debts of the business.