If the Absolute Value of the Tax Multiplier Equals 1

question 112

Multiple Choice

If the absolute value of the tax multiplier equals 1.5, real GDP is $13 trillion, and potential GDP is $13.6 trillion, then taxes would need to be cut by ________ to restore the economy to potential GDP.

• A)$400 billion
• B)$450 billion
• C)$600 billion
• D)None of these options is correct. Taxes should be increased in this case.

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Definitions:

Preconscious

A term in psychoanalytic theory referring to the part of the mind that contains thoughts and feelings that are not currently in consciousness but can be readily brought to consciousness.

Anima/Animus

Concepts in Jungian psychology representing the unconscious feminine side in men (anima) and the unconscious masculine side in women (animus).

Shadow

In Jungian psychology, the shadow aspect refers to the unconscious part of the personality which the conscious ego does not identify in itself, often containing repressed weaknesses and shortcomings.

Persona

A social mask or identity one presents to the world, often different from one's true self.