In the Keynesian-Cross Analysis, Assume That the Analysis of Taxes

question 103

Multiple Choice

In the Keynesian-cross analysis, assume that the analysis of taxes is changed so that taxes, T, are made a function of income, as in T = T + tY, where T and t are parameters of the tax code and t is positive but less than 1. As compared to a case where t is zero, the multiplier for government purchases in this case will:

• A) not change.
• B) be smaller.
• C) be bigger.
• D) be equal to 1.

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Definitions:

Retinal Disparity

Describes the binocular cue for depth perception based on the differences between the two retinal images when looking at an object, aiding in gauging distances.

Linear Perspective

A depth cue that results from the fact that parallel lines appear to converge as they recede into the distance.

Relative Luminance

A measure of the amount of light that is reflected from, or emitted by, a surface, normalized to a scale from 0 to 1, based on human visual sensitivity.

Size Constancy

Size constancy is a perceptual phenomenon where the perceived size of an object remains constant despite changes in the distance or size of the image it projects on the retina.