If the Tax Multiplier Is -12 and Taxes Are Increased

question 109

Multiple Choice

If the tax multiplier is -12 and taxes are increased by $6 billion, output

• A) falls by $2 billion.
• B) falls by $72 billion.
• C) increases by $2 billion.
• D) increases by $72 billion.

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Definitions:

HST Remittance

The process of sending payments of the Harmonized Sales Tax collected by businesses to the relevant tax authority.

HST Returns

The process of reporting and remitting the Harmonized Sales Tax collected by businesses to the government, typically on a periodic basis.

HST-Inclusive Price

The total price of a product or service including the Harmonized Sales Tax, which combines the federal goods and services tax and provincial sales tax where applicable.

Nearest Whole Percent

Rounding off a percentage to the closest whole number.