During the period from 2001 to 2006, there were several major cuts in personal income tax rates.What effect did these have on the value of the multiplier?
A)They decreased the value of the multiplier.
B)They had no effect on the multiplier.
C)They increased the value of the multiplier.
D)The effect was uncertain.

Question

Quizplus · Accepted Answer

Lower personal income tax rates increase disposable income and encourage spending, which in turn can lead to an increase in the value of the multiplier. Therefore, the tax cuts likely had an increasing effect on the multiplier.

During the Period from 2001 to 2006, There Were Several