When Calculating the Effect of a Tax Cut on Equilibrium

question 87

Multiple Choice

When calculating the effect of a tax cut on equilibrium GDP,the tax multiplier is always

• A) 2.0 smaller than the spending multiplier
• B) 1.0 smaller than the spending multiplier and negative in sign
• C) positive
• D) positive and larger than the spending multiplier
• E) negative and larger than the spending multiplier

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Definitions:

World Headquarters

The main office or central hub of an organization from which global operations are directed or managed.

Sales

The process or activity of selling products or services.

Production

The process of creating goods and services through the combination of labor, materials, and technology.

Integrator

A role or function that involves coordinating and combining different elements, resources, or systems to work effectively together.