If the MPC = 2/3, What Is the Tax Multiplier

question 75

Multiple Choice

If the MPC = 2/3, what is the tax multiplier according to the aggregate expenditures model?

• A) -2
• B) -3
• C) -4
• D) -5

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Definitions:

Cash Received

The amount of money a business collects, normally in exchange for goods or services.

Customers Account

Refers to the individual accounts or ledgers maintained by a business to record transactions related to sales, returns, payments, and balances owing for each customer.

Cash Receipts Journal

A financial journal that tracks all cash inflows or money received by a business, including sales, loans, and investments.

Cash Investment

Financial assets that are highly liquid and can be quickly converted into cash, or the act of placing money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.