Question

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 Select one: a. tax, then, generates a $100 million decline in national income b. tax multiplier overpowers the income multiplier, triggering a rollback in national income c. effect on national income is uncertain d. level of national income expands by $100 million

Answer 1

Answer: level of national income expands by $100 million

Explanation: The level of National income expands by $100 million. National income which can also be termed GDP(gross domestic product) is the measure of measure of economic production in a country over a specific time.

Increase in GDP is caused by a whole number of factors some of which includes;

*Increase in productivity

*Increase in investment

*Government spending etc.

All the listed above are examples of what the Government has done with the acquired $100 million in tax.