When the Government Develops Policies to Stabilize the Economy

question 118

Multiple Choice

When the government develops policies to stabilize the economy

• A) these policies are unaffected by the multiplier effect.
• B) only expansionary fiscal policy is impacted by the multiplier effect.
• C) it needs to consider the multiplier effect for all fiscal policies.
• D) only contractionary fiscal policy is impacted by the multiplier effect.

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Definitions:

Personal Income Taxes

Taxes levied on the income of individuals, affecting personal earnings.

Dividends Shareholders

Profits distributed to shareholders of a corporation, typically in the form of cash payments or additional shares of stock.

Payroll Tax

Taxes levied on either employers or employees, often determined as a fraction of the wages that businesses pay to their workforce.

Best Tax

Refers to an optimal tax system that maximizes efficiency and fairness, minimizing distortion in resource allocation and economic behaviors.