A principal cause of the business cycle is the changes in total spending that occur in the overall economy.
a. True
b. False
Indicate whether the statement is true or false
Question 2
When the government levies a 100 million tax on people's income and puts the 100 million back into the economy in the form of a spending program, such as new interstate highway construction, the:
a. tax, then, generates a 100 million decline in real GDP.
b. level of real GDP expands by 100 million.
c. effect on real GDP is uncertain.
d. tax multiplier overpowers the income multiplier, triggering a rollback in real GDP.
