There are two kinds of changes in net taxes: First,net taxes can change if the government changes its tax or transfer policies.Second,net taxes change automatically as income rises and falls,without any change in policy.The _________ kind of change sets off the multiplier process,while the _________ kind of change occurs during the multiplier process.

Question

Quizplus · Accepted Answer

The first kind of change refers to discretionary fiscal policy, where the government intentionally changes tax or transfer policies to achieve certain economic goals. This kind of change can set off the multiplier process. 
The second kind of change refers to automatic stabilizers, where net taxes change automatically as income rises and falls. This occurs during the multiplier process, as it affects the disposable income of households and the spending decisions they make. Therefore, the correct answer is B, as the first kind of change sets off the multiplier process, while the second kind of change occurs during it.

There Are Two Kinds of Changes in Net Taxes: First,net