A Tax Increase Has a Smaller Impact on the Economy

Multiple Choice

A tax increase has a smaller impact on the economy than does a decrease in government spending of the same magnitude because

A) Congress is slow in passing tax increases.
B) consumers pay for part of the tax increase by reducing their savings.
C) tax changes have more of a direct impact on income than does an equivalent change in government spending.
D) fiscal policy is weaker than monetary policy.