Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have to do with the government purchases multiplier?
What will be an ideal response?
The tax rate affects how much of the additional income that results from the initial increase in government purchases is available to be consumed. A higher tax rate decreases the amount of disposable income that can be consumed at each round of the multiplier process.
Economics
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Free trade ________ living standards by ________ economic efficiency
A) lowers; eliminating B) raises; equalizing C) lowers; decreasing D) raises; increasing
Economics
Natasha is going to buy a risky asset that has an expected value of $62, which yields an expected utility of 146. Equivalently, she could get utility of 146 from a certainty equivalent of $43. What is Natasha's risk premium?
A) $19 B) $43 C) $103 D) $105
Economics