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:

Overjustification Effect

The reduction in intrinsic motivation to perform a task due to the introduction of extrinsic rewards for performing it.

Contingent Reward

A motivational strategy where rewards are given based on the achievement of specific criteria or the performance of certain actions.

Favorable Information

Information that presents a person, company, or product in a positive light, typically used in promotional or persuasive contexts.

Baumeister and Cairns

Refers to researchers who have contributed to the fields of psychology, particularly in exploring self-concept, motivation, and the psychological aspects of sports.