Answer to Question #253470 in Financial Math for Millicent

Question

Which of the following statements are correct?

1. The introduction of government spending increases the size of the multiplier.
2. The introduction of taxes increases the size of the multiplier.
3. The introduction of taxes reduces the slope of the consumption function.

Select one:

A. None of the statements is correct.

B. A

C. B

D. C

Answer 1

1.The introduction of government spending increases the size of the multiplier.