Multiple Choice
The demand-side effect of a change in taxes is less than the same sized change in government expenditure because
A) the amount by which taxes change is affected by the MPC.
B) only part of the increase in disposable income from the tax cut is spent.
C) changes in government expenditure do not directly affect consumption.
D) tax rates are the same regardless of income levels.
Correct Answer:
Verified
Correct Answer:
Verified
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