If the Value of a Government Taxation Multiplier Is 1

question 145

Multiple Choice

If the value of a government taxation multiplier is 1.8,which of the following is likely to be true if all other variables remain unchanged?

• A) A $1 reduction in taxation increases GDP by $1.80.
• B) A $1 increase in taxation increases GDP by $1.80.
• C) A $1.80 increase in taxation increases GDP by $1.80.
• D) A $1.80 reduction in taxation increases GDP by $1.80.

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Definitions:

Company's Management

Individuals responsible for overseeing the operations and making decisions within a corporation.

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained rather than being paid out as dividends to shareholders, often used for reinvestment in the business, debt reduction, or to bolster the balance sheet.

Total Stockholders' Equity

The total amount of capital that shareholders have invested in a company, including retained earnings and contributed surplus.

Dividends Declared

Profits announced by a company's board of directors to be distributed among shareholders, typically in the form of cash or additional shares.