Author Question: If the government spending multiplier is 10, then the tax multiplier (Read 59 times)

geoffrey · **on:** Apr 19, 2019

Question 1

Refer to the information provided in Figure 24.5 below to answer the question(s) that follow.

Refer to Figure 24.5. If the economy is in equilibrium and the government increases spending by $200 billion and increases taxes by $200 billion, equilibrium aggregate output

◦ does not change.
◦ increases by $200 billion.
◦ increases by less than $200 billion.
◦ increases by more than $200 billion.

Question 2

If the government spending multiplier is 10, then the tax multiplier

◦ is -4.
◦ is -5.
◦ is -9.
◦ cannot be determined because the
MPS is not given.

LP · **Reply #1 on:** Apr 19, 2019

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