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Taxes, the Multiplier Effect, and Automatic Stabilizers
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Taxes, the Multiplier Effect, and Automatic Stabilizers
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20. Fiscal Policy / Taxes, the Multiplier Effect, and Automatic Stabilizers / Problem 3
Problem 3
What is the inverse relationship between tax changes and household income?
A
Lower taxes increase household income, leading to a positive multiplier effect.
B
Higher taxes decrease household income, leading to a negative multiplier effect.
C
Lower taxes decrease household income, leading to a negative multiplier effect.
D
Higher taxes increase household income, leading to a positive multiplier effect.
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