The Effect of a Change in Taxes Is Less Than

question 73

Multiple Choice

The effect of a change in taxes is less than the same sized change in government expenditure because

• A)the amount by which consumption initially changes is equal to MPC times the tax change.
• B)some people do not pay their taxes.
• C)changes in government expenditure do not directly affect consumption.
• D)tax rates are the same regardless of income levels.
• E)none of the above

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Definitions:

Machines

Mechanical or electronic devices that perform various tasks when supplied with input or energy.

Provides Feedback

Refers to the process of giving constructive information or criticism to individuals regarding their performance or behavior.

Capacity Plan

Identifying the necessary production capabilities of an enterprise to fulfill varying product demands.

Production Plan

An outline of what a company plans to produce, in what quantities, and when, to meet anticipated demand.