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The Figure Above Shows Two Aggregate Expenditure Lines

Question 47

Multiple Choice

  The figure above shows two aggregate expenditure lines. -In the figure above, what would happen to the size of the multiplier if marginal income tax rates were increased? A)  The multiplier would fall in value and might become negative. B)  The multiplier would fall in value but would not become negative. C)  The multiplier would rise in value. D)  The multiplier would not change in value. E)  More information is needed to determine the effect on the size of the multiplier. The figure above shows two aggregate expenditure lines.
-In the figure above, what would happen to the size of the multiplier if marginal income tax rates were increased?


A) The multiplier would fall in value and might become negative.
B) The multiplier would fall in value but would not become negative.
C) The multiplier would rise in value.
D) The multiplier would not change in value.
E) More information is needed to determine the effect on the size of the multiplier.

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