A) Income will rise because the government decrease in purchases occurs so slowly.
B) Income in the economy will remain unchanged.
C) People will spend only a part of their tax cut, so income will eventually fall by $200 million.
D) Income will decrease by $200 million times the multiplier.
B) Income in the economy will remain unchanged.
C) People will spend only a part of their tax cut, so income will eventually fall by $200 million.
D) Income will decrease by $200 million times the multiplier.
ANSWER:
C