Question

In: Economics

An increase in taxes when the economy is above full employment ​ ______ aggregate demand and...

An increase in taxes when the economy is above full employment ​ ______ aggregate demand and real​ GDP, and the price level​ ______.

A.

does not​ change; does not change

B.

​decreases; falls

C.

​increases; falls

D.

​increases; rises

The magnitude of the tax multiplier is equal to​ _______.

A.

the government expenditure multiplier divided by MPC

B.

MPC times the government expenditure multiplier

C.

the government expenditure multiplier

D.

MPC

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
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