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  3. Study Set
    Macroeconomics Principles Applications
  4. Exam
    Exam 11: The Income-Expenditure Model
  5. Question
    The Tax Multiplier Is Negative Because
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The Tax Multiplier Is Negative Because

Question 2

Question 2

Multiple Choice

The tax multiplier is negative because


A) increases in taxes decrease disposable personal income and lead to a reduction in consumption spending.
B) increases in consumption spending have a negative impact on tax revenues.
C) tax rates are inversely related to tax revenues.
D) taxes always have a negative impact on the economy.

Correct Answer:

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