In General, Autonomous Spending Increases Have a Lower Multiplier Effect

question 124

True/False

In general, autonomous spending increases have a lower multiplier effect on real GDP when the economy is open to international trade.

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Definitions:

Federal Tax Revenues

Money collected by the government from taxes imposed on individuals and businesses that is used to fund public services and programs.

Deadweight Loss

The reduction in economic efficiency that happens when a good or service does not reach or cannot reach its equilibrium.

Efficient Tax System

A tax system that collects required revenue without excessive government borrowing, and does so in a way that does not impede economic growth.

Tax Revenues

The income that is received by the government from taxpayers, including individuals and businesses, to fund public expenditures.