Refer to the information provided in Figure 27.2 below to answer the question(s) that follow. Figure 27.2 -Refer to Figure 27.2. The tax multiplier is largest (in absolute value) when the aggregate demand curve shifts from A) AD₁ to AD₂. B) AD₃ to AD₄. C) AD₅ to AD₆. D) The output multiplier is the same for all AD curve shifts shown in the figure.

Question

Quizplus · Accepted Answer

The tax multiplier is largest (in absolute value) when the aggregate demand curve shifts from AD1 to AD2 because the change in government spending is the largest in this case.

Refer to the Information Provided in Figure 27