64) After the household has adjusted its private saving behaviour to take into account the new tax system as described in 63), then compared to its original level of saving and welfare, A) saving will decrease and the household will be better off. B) saving will decrease and the household will be no better or worse off. C) saving will decrease and the household will be worse off. D) saving may increase or decrease and the household may be better off or may be worse off. E) saving may increase or decrease and the household will be better off.
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1. The multiplier helps explain
A. why a decrease in taxes causes real Gross Domestic Product (GDP) to fall by more than the amount of the decrease in taxes. |
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B. why a fall in investment cause real Gross Domestic Product (GDP) to rise by more than the amount of the decrease in investment. |
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C. why a rise in government expenditures causes real Gross Domestic Product (GDP) to rise by more than the amount of the increase in government spending. |
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D. why an increase in disposable income causes real Gross Domestic Product (GDP) to rise by less than the amount of the increase in disposable income.
2. If the marginal propensity to save (MPS) increases, the multiplier
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