The simple tax multiplier must always be smaller than the simple spending multiplier,regardless of the value of the MPC.

Name: The simple tax multiplier must always be smaller than the simple spending multiplier,regardless of the value of the MPC.
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Question

Quizplus · Accepted Answer

The simple tax multiplier is always smaller because it is calculated as the negative of the marginal propensity to consume (MPC) times the spending multiplier, which reduces its absolute value compared to the spending multiplier.

The Simple Tax Multiplier Must Always Be Smaller Than the Simple