The effect of an increase in personal tax rates is to: decrease the dollar amounts of consumption and saving at each level of real output and to reduce the size of the spending multiplier increase the dollar amounts of consumption and saving at each level of real output and to increase the size of the spending multiplier decrease the dollar amounts of consumption and saving at each level of real output and increase the size of the spending multiplier decrease the dollar amounts of consumption and saving at each level of real output, but not to change the size of the spending multiplier
The effect of an increase in personal tax rates is to: decrease the dollar amounts of consumption and saving at each level of real output and to reduce the size of the spending multiplier increase the dollar amounts of consumption and saving at each level of real output and to increase the size of the spending multiplier decrease the dollar amounts of consumption and saving at each level of real output and increase the size of the spending multiplier decrease the dollar amounts of consumption and saving at each level of real output, but not to change the size of the spending multiplier
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.4P
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