The Tax Multiplier Is Smaller in Absolute Value Than the Government

question 193

Multiple Choice

The tax multiplier is smaller in absolute value than the government purchases multiplier because some portion of the

• A)decrease in taxes will be saved by households and not spent,and some portion will be spent on imported goods.
• B)decrease in taxes will be saved by households and not spent,and some portion will be spent on consumer durable goods.
• C)increase in government purchases will be saved by households and not spent,and some portion will be spent on imported goods.
• D)increase in government purchases will be saved by households and not spent,and some portion will be spent on consumer durable goods.

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Definitions:

Dis-

A prefix indicating separation, removal, or negation.

Dislocate

To displace the bones of a joint, causing them to no longer be in their proper relation to each other.

Separate

To set or keep apart; to divide or segregate.

Pandemic

An epidemic of an infectious disease that has spread across a large region, for instance multiple continents or worldwide, affecting a substantial number of people.