For this reason, the multiplier effects of changes in taxes and transfer payments are smaller than the multiplier impacts of government spending.
What will be an ideal response?
g. If taxes are "lump sum"—that is, set at a fixed level that does not change with income, then we can write T = ×T. The tax multiplier for a lump sum tax works in two stages. In the first stage, consumption is reduced by mpc (?×T), which can be expressed as: ?C = - (mpc) ?×T In the second stage, this reduction in consumption has the regular multiplier effect on equilibrium income. The combined effect can be expressed as: ?Y = (mult) ?C = - (mult) (mpc) ?×T chapter 10 page 232
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Which of the following statements is true about data?
A) Empiricism does not necessarily involve data. B) Consistency of models can be checked using data. C) Convincing data analysis in economics relies on using a small sample. D) Facts that describe the world are not considered data.
Contractionary fiscal policy can lead to a depreciation of the nation's currency
Indicate whether the statement is true or false