During Normal Times, the Multiplier Effect of an Increase in Government

Multiple Choice

During normal times, the multiplier effect of an increase in government spending financed by taxes will be

A) strengthened, if the additional spending flows into sectors of the economy where the unemployment rates are low.
B) weakened by an offsetting reduction in spending due to the higher taxes.
C) unaffected, as long as the higher taxes are in the future.
D) strengthened, if corporate tax rates are increased and personal tax rates remain unchanged.