Question 25Which of the following is true regarding the simple tax multiplier?I has the same sign but larger magnitude than the simple fiscal multiplier.O It has the same sign but lower magnitude than the simple fiscal multiplier.O t has the opposite sign and lower magnitude than the simple fiscal multiplier.It has the opposite sign and a larger magnitude than the simple fiscal multiplier.

The multiplier impact of a tax reduction can be impacted by the size of the tax break, the MPC to…

Answered: Which of the following is true…

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Economics

Which of the following is true regarding the simple tax multiplier?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.5P: Explain the difference between the government purchases multiplier and the net tax multiplier. If...

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Explain the difference between the government purchases multiplier and the net tax multiplier. If the MPC falls, what happens to the tax multiplier?
When government spending increases by $1, planned expenditures increase by $1 O A. times the spending multiplier and the equilibrium level of income will increase by $1. O B. and the equilibrium level of income will increase by $1. O C. and the equilibrium level of income will increase by $1 times the spending multiplier. O D. and the equilibrium level of income will increase by less than $1. When taxes are cut by $1, planned expenditures O A. decrease by $1 and the equilibrium level of income will decrease by $1 times the tax multiplier. O B. increase by less than $1 and the equilibrium level of income will increase by $1 times the tax multiplier. OC. increase by $1 and the equilibrium level of income will increase by S1 times the tax multiplier. O D. increase by $1 and the equilibrium level of income will increase by $1 times the spending multiplier. Click to select your answer! V560
Why does a $1 increase in government purchases lead to more than a $1 increase in income and spending? OA. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to a decrease in induced spending OB. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to a decrease in induced spending OC. Through the government purchases multiplier, the $1 increase in government spending will lead to an increase in aggregate demand and national income, which will lead to an increase in induced spending OD. Through the government purchases multiplier, the $1 increase in government spending will lead to a decrease in aggregate demand and national income, which will lead to an increase in induced spending
Which of the following would be classed as an expansionary fiscal policy? O A. An increase in the money supply Ов. A reduction in the number of goods exempted from VAT An increase in government taxation OD. An increase in government expenditure
Which of the following would be classed as an expansionary fiscal policy? O An increase in the money supply O A reduction in the number of goods exempted from VAT O An increase in the VAT rate O An increase in government expenditure
4. Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?
Question 4 functions as an automatic fiscal stabilizer because it increases when the economy is in a recession and decreases when the economy is in a recovery or boom. O Real GDP Nominal GDP O Unemployment insurance O Inflation
Figure 8-23. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 6 on4m21 3 Tax Revenue B Tax Size Refer to Figure 8-23. If the economy is at point A on the curve, then a small increase in the tax rate will O increase the deadweight loss of the tax and increase tax revenue. O increase the deadweight loss of the tax and decrease tax revenue. decrease the deadweight loss of the tax and increase tax revenue. O decrease the deadweight loss of the tax and decrease tax revenue.
Which of the following statements is true? O A balanced budget would not affect income because an increase in government spending is exactly matched by an increase in taxes. OIf crowding out exists, contractionary fiscal policy will cause the aggregate demand curve to shift in by more" than indicated by the government spending multiplier. O When aggregate expenditures are greater than real GDP, there will be inventory accumulation. O The flatter the aggregate supply curve, the less the amount of government spending necessary to close a $1 billion GDP gap.
8. Given each of the following values for both the spending multiplier and the tax multiplier, calculate both the MPC and the MPS. a. 20 b. 10 c. 8 d. 5
The formula for the tax multiplier is Select one: O a. -MPC/ (MPC + 1). Ob. MPC/ (1 + MPC). Oc. 1/(1- MPC). O d. -MPC/(1 - MPC).
suppose the government wishes to illuminate recess or a gap of 100 billion in the MPC is .075 how much must’ve government increase in spending instead of increasing government spending by the amount you calculated what would be the effect of the government decreasing taxes by this amount explain?