Suppose the tax multiplier is 2.7. Assuming prices are constant, this means that

Group of answer choices

a $1 rise in government spending will raise both total spending and Real GDP (assuming prices are constant) by $2.70.

a $1 decline in taxes will lower Real GDP by $2.70.

a $1 decline in taxes will raise Real GDP by $2.70.

a $1 rise in taxes will change interest rates by 2.70 percent compared to what they were before the $1 rise in government spending.

none of these options.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The correct answer is a 1 decline in ta... View the full answer