A Change in Tax Rates

question 215

Multiple Choice

A change in tax rates

• A)has a less complicated effect on GDP than does a tax cut of a fixed amount.
• B)has a larger multiplier effect the smaller the tax rate.
• C)will not affect disposable income.
• D)will not affect the size of the multiplier.

---

Definitions:

Limited Knowledge

The state of having restricted information or understanding about a subject or situation, emphasizing incomplete or finite expertise.

Behavioral Economists

Behavioral economists study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical economics.

Endowment Effect

The phenomenon where people ascribe more value to things merely because they own them, often leading to a discrepancy between buying and selling prices.

Raffle Prize

A reward given to the winner(s) of a raffle, which is a form of lottery or contest.