A tax multiplier equal to 4.30 would imply that a 100 tax increase would lead to a:
a. 430 decline in real GDP.
b. 430 increase in real GDP.
c. 4.3 percent increase in real GDP.
d. 4.3 percent decrease in real GDP.
e. 43 percent decrease in real GDP.
Question 2
Which of the following is a reason for the Keynesian view that monetary policy plays a minor role in affecting the economy?
a. The money demand curve is vertical.
b. The investment curve is very steep.
c. The money demand curve is horizontal at any interest rate.
d. The monetary rule.
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