A Tax Multiplier Equal to − 4

question 35

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.

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Definitions:

Percentage

A fraction or ratio represented as a part of 100.

Currency

A medium of exchange used in economic systems, typically issued by a governmental body and accepted within a particular geographic territory.

Energy Exchange

A process by which energy is transferred from one system or object to another, often seen in ecosystems as the transfer of energy from producers to consumers through food chains.

Living Systems

Complex networks of interacting organisms and their physical environment, functioning together as a coherent group for energy flow, reproduction, and adaptation.