The Effect of Imposing a Lump-Sum Tax Is to

question 84

Multiple Choice

The effect of imposing a lump-sum tax is to

• A)reduce the absolute levels of consumption and saving at each level of GDP and to reduce the size of the multiplier.
• B)reduce the absolute levels of consumption and saving at each level of GDP but to not change the size of the multiplier.
• C)reduce the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.
• D)increase the absolute levels of consumption and saving at each level of GDP and to increase the size of the multiplier.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or during the normal operation cycle of the business, whichever is longer.

Net Income

Net income is the total profit of a company after all expenses and taxes have been subtracted from total revenue.

Investments

Resources such as money put into buying financial instruments or other assets to gain profitable returns in the form of income, interest, or appreciation of value.

Accounts Payable

An accounting entry that represents a company's obligation to pay off a short-term debt to its creditors or suppliers.