The magnitude of the tax multiplier is smaller than the magnitude of the government expenditure multiplier because
A) a change in taxes creates additional induced taxes.
B) a change in taxes does not change expenditures.
C) an increase in taxes decreases expenditures.
D) a change in taxes does not change expenditures by as much as the same size change in government expenditure.
E) a decrease in government expenditure decreases tax revenue.
Correct Answer:
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Q20: Q21: Induced taxes are defined as taxes Q22: Discretionary fiscal policy is a fiscal policy Q23: If government expenditure on goods and services Q24: When an economy is above full employment Q26: Ignoring any supply-side effects, suppose the government Q27: Automatic changes in tax revenues and expenses Q28: The structural deficit or surplus is the Q29: If the Commonwealth government cuts taxes by Q30: Do automatic fiscal stabilisers eliminate business cycles?
A) that
A)
A)
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