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If the Tax Multiplier Is -1

question 168

Multiple Choice

If the tax multiplier is -1.5 and a $200 billion tax increase is implemented,what is the change in GDP,holding everything else constant? (Assume the price level stays constant.)


Definitions:

Mortgaged

A status indicating that a property is subject to a mortgage, a loan in which the property acts as security for the repayment of the loan.

Franchised Stores

Retail outlets that operate under a license from a brand or company, allowing them to sell its products or services.

Covenant

A formal agreement or promise between two or more parties to perform or not perform certain actions.

Gross Sales Revenue

The total income derived from sales of goods or services, before any deductions or expenses are subtracted.

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