A Tax Multiplier Equal to − 4

question 177

Multiple Choice

A tax multiplier equal to − 4.30 would imply that a $100 tax increase would lead to a:

• A) $430 decline in real GDP.
• B) $430 increase in real GDP.
• C) 4.3 percent increase in real GDP.
• D) 4.3 percent decrease in real GDP.
• E) 43 percent decrease in real GDP.

---

Definitions:

Par Value

The stated or principal value of a bond, stock share, or coupon as specified on its certificate or document.

Journal Entries

Journal entries are the record of financial transactions in the accounting books, detailing debts and credits for each account affected by the transaction.

Paid-In Capital

Funds raised by a company from equity, and not from ongoing operations, reflected on the balance sheet.

Treasury Stock

Shares that were once outstanding and have been bought back by the issuing company, reducing the amount of stock on the open market.