The magnitude of the tax mulitiplier is equal to A. the government expenditure multiplier B. MPC...

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The magnitude of the tax mulitiplier is equal to A. the government expenditure multiplier B. MPC times the government expenditure multiplier OC. the government expenditure multiplier divided by MPC O D. MPC

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Answer 1

Answer #1

B) MPC times the government expenditure multiplier

Government expenditure multiplier = 1/(1- MPC)

Tax multiplier = - MPC x 1/(1 - MPC) = - MPC x Government expenditure multiplier

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Answer 2

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The magnitude of the tax mulitiplier is equal to A. the government expenditure multiplier B. MPC...

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The magnitude of the tax mulitiplier is equal to A. the government expenditure multiplier B. MPC...