The Tax Multiplier Is Most Likely to Be Larger Than

question 77

Multiple Choice

The tax multiplier is most likely to be larger than the expenditure multiplier when ________.

• A)monetary policy is at the zero lower bound
• B)rising inflation causes the real interest rate to decline
• C)when the change in tax revenue is large relative to the change in government purchases
• D)the expansionary fiscal policy is expected to be followed by higher taxes

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Definitions:

Quantitative Terms

Conditions or parameters that can be measured and quantified, often used in contracts and agreements.

Profit Maximisation

An objective of management to achieve the highest possible profit from operations, usually by increasing revenue and/or reducing costs.

Employee Morale

The overall outlook, attitude, satisfaction, and confidence that employees feel at work, which can significantly impact productivity and retention.

Constraints

Limitations or restrictions that affect the planning, process, or outcome of an activity or system.