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:

Economic Activity

Any action that involves the production, distribution, and consumption of goods and services at all levels within a society.

Declining

A phase in the product life cycle where sales and profits begin to decrease as the product loses market interest or becomes obsolete.

Inflationary Economy

An economic condition characterized by a general increase in prices and fall in the purchasing value of money.

Escalates

The process of increasing or rising in intensity, magnitude, or severity.