Author Question: If the tax multiplier is -4 and taxes are reduced by $35 billion, output (Read 42 times)

dakota nelson · **on:** Apr 19, 2019

Question 1

Taxes are reduced by $10 billion and income increases by $200 billion. The value of the tax multiplier is

◦ -20.
◦ -5.
◦ -2.
◦ -0.5.

Question 2

If the tax multiplier is -4 and taxes are reduced by $35 billion, output

◦ falls by $8.75 billion.
◦ falls by $140 billion.
◦ increases by $140 billion.
◦ increases by $8.75 billion.

SeanoH09 · **Reply #1 on:** Apr 19, 2019

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