Which of the Following Is NOT a Reason Why the Effects

question 20

Multiple Choice

Which of the following is NOT a reason why the effects of tax cuts on government spending dissipate and each additional change in consumption and income becomes smaller and smaller?

• A)Some of the increase in income will be lost through taxation.
• B)Some of the increase is saved and does not result in an increase in consumer demand.
• C)Some of the increase in consumption will be an additional demand for imported goods.
• D)Some of the increase is used for business investment.

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