In the Keynesian-Cross Analysis, Assume That the Analysis of Taxes

question 103

Multiple Choice

In the Keynesian-cross analysis, assume that the analysis of taxes is changed so that taxes, T, are made a function of income, as in T = T + tY, where T and t are parameters of the tax code and t is positive but less than 1. As compared to a case where t is zero, the multiplier for government purchases in this case will:

• A) not change.
• B) be smaller.
• C) be bigger.
• D) be equal to 1.

---

Definitions:

Birthrate

is measured as the number of live births per thousand people in a population per year, indicating the rate at which a population is growing or declining.

Population

The total number of individuals or inhabitants in a specific area or region at a certain time.

Principle Of Population

A theory suggesting that population growth is potentially exponential while the growth of the food supply or other resources is linear.

Subsistence

The minimum level of resources (food, shelter, clothing) that is required for individuals to survive.