The Demand-Side Effect of a Change in Taxes Is Less

question 239

Multiple Choice

The demand-side effect of a change in taxes is less than the same sized change in government expenditure because

• A) the amount by which taxes change is affected by the MPC.
• B) only part of the increase in disposable income from the tax cut is spent.
• C) changes in government expenditure do not directly affect consumption.
• D) tax rates are the same regardless of income levels.

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Definitions:

Large Number

A term often used in mathematics and computing to describe a value that is significantly larger than most values considered in a given context.

Product Specifications

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