Changes in Taxes First Cause Changes in _____, and Thus

question 3

Multiple Choice

Changes in taxes first cause changes in _____, and thus the government tax multiplier is _____ than the government spending multiplier.

• A) aggregate spending; larger
• B) aggregate spending; smaller
• C) disposable income; larger
• D) disposable income; smaller

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Definitions:

Government Intervention

Involvement by the government in the market to influence the allocation of resources and distribution of goods.

Efficient Results

Outcomes in which resources are allocated in a way that maximizes the net benefits to society.

Equitable Outcome

An equitable outcome is a fair and impartial distribution of resources or opportunities among all members of a community or society, taking into account the needs and contributions of each individual.

Spending

The act of expending funds to purchase products or services.