Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions :
Scenario: Fiscal Policy
Consider the economy of Arcadia. Its households spend 75% of increases in their income. There are no taxes and no foreign trade. Its currency is the arc. Potential output is 600 billion arcs.
-(Scenario: Fiscal Policy) Look at the scenario Fiscal Policy. Suppose the government decides to tax its citizens. The tax multiplier is:

A) greater than the government spending multiplier.
B) less than the government spending multiplier.
C) zero, because changes in taxes have no effect on aggregate demand.
D) impossible to determine.