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.

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