MCQOPTIONS
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MCQOPTIONS
| 1. |
Which of the following statements is not true in case of the balanced budget multiplier? |
| A. | The first round contractionary effect of additional tax revenue (-b, ?T; b = MPC) is less than the explanatory effect of additional Government expenditure (= ?G). |
| B. | The value of tax multiplier for proportional taxes is - b / (1 - b + bt) (where b = MPC and t = tax rate). |
| C. | The value of balanced budget multiplier is unity when taxes are lump sum taxes. |
| D. | None of the above |
| Answer» E. | |