The Romer and Romer paper, "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," found that tax changes that are made to promote long-run growth
Or to reduce an inherited budget deﬁcit tend to result in
A) a strong positive relationship between taxes and output GDP.
B) a weak positive relationship between taxes and output GDP.
C) an uncertain correlation between taxes and output GDP.
D) a strong negative relationship between taxes and output GDP.

Question

Quizplus · Accepted Answer

The Romer and Romer paper concluded that tax increases designed to reduce an inherited budget deficit or to promote long-run growth have a strong negative effect on economic activity, indicating a strong negative relationship between taxes and output GDP.

The Romer and Romer Paper, "The Macroeconomic Effects of Tax