The Tax Multiplier Is Smaller in Absolute Value Than the Government

question 193

Multiple Choice

The tax multiplier is smaller in absolute value than the government purchases multiplier because some portion of the

• A)decrease in taxes will be saved by households and not spent,and some portion will be spent on imported goods.
• B)decrease in taxes will be saved by households and not spent,and some portion will be spent on consumer durable goods.
• C)increase in government purchases will be saved by households and not spent,and some portion will be spent on imported goods.
• D)increase in government purchases will be saved by households and not spent,and some portion will be spent on consumer durable goods.

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Definitions:

Xer/o

A prefix in medical terminology meaning dry, often used to describe conditions of dryness in the body.

Hem/o

A prefix related to blood, used in medical terminology.

Hepat/o

A prefix associated with the liver.

Neur/o

A prefix related to nerves or the nervous system.