(Last Word) According to the research of Christina Romer and David Romer, tax increases implemented to reduce an inherited budget deﬁcit
A) reduce real output by the same amount as any other tax increase.
B) reduce real output by more than other tax increases.
C) reduce real output by less than other tax increases.
D) increase real output, contrary to what occurs with other tax increases.

Question

Quizplus · Accepted Answer

Christina Romer and David Romer's research suggests that tax increases aimed at reducing an inherited budget deficit have a smaller negative impact on real output compared to other types of tax increases. This is because such tax increases are often anticipated and considered necessary for long-term fiscal stability, which can mitigate their negative effects on economic activity.

(Last Word) According to the Research of Christina Romer and David