12. If the tax multiplier is -6 and taxes are reduced by $100 billion, output:(A) falls by $100 billion. (B) falls by $600 billion. (C) increases by $600 billion.(D) increases by $100 billion.

The tax multiplier is a concept in economics that measures the impact of changes in taxes on overall…

Answered: 12. If the tax multiplier is -6 and…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.7P

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12. If the tax multiplier is -6 and taxes are reduced by $100 billion, output: (A) falls by $100 billion. (B) falls by $600 billion. (C) increases by $600 billion. (D) increases by $100 billion.