Exhibit 12-2
-In an economy characterized by the aggregate expenditure line in Exhibit 12-2, if net taxes were independent of the level of real GDP what would the tax multiplier be equal to?
A)0
B)1
C)2
D)3

Question

Exhibit 12-2 
-In an economy characterized by the aggregate expenditure line in Exhibit 12-2, if net taxes were independent of the level of real GDP what would the tax multiplier be equal to?
A)0 
B)1 
C)2 
D)3

Quizplus · Accepted Answer

The tax multiplier is equal to 1 when net taxes are independent of the level of real GDP.

Exhibit 12-2 -In an Economy Characterized by the Aggregate Expenditure Line in Expenditure