23) According to the IS curve, the tax multiplier is always ________. A) larger

ID: 1099076 • Letter: 2

Question

23) According to the IS curve, the tax multiplier is always ________.

A) larger in absolute value than the expenditure multiplier

B) equal to the expenditure multiplier

C) smaller in absolute value than the expenditure multiplier

D) equal to one

24) A cut in the payroll tax will tend to cause, other things the same, ________.

A) a change in aggregate demand, with no effect on supply

B) a change in both aggregate demand and supply

C) a change in aggregate supply, with no effect on demand

D) no change in either aggregate demand or supply

25) According to supply-side theory, if one starts from a balanced budget, a cut in taxes will tend to cause ________.

A) a budget deficit

B) no change in the federal government budget

C) a decrease in aggregate supply and an increase in aggregate demand