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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Suppose Dave drives more recklessly when he has car insurance than when he does not have car insurance. This is an example of the moral hazard problem associated with insurance
a. True b. False Indicate whether the statement is true or false
Economics
Willie's wage increased, and he responded by enjoying more hours of leisure per day. Is Willie's behavior consistent with an upward-sloping labor-supply curve?
Economics