The autonomous tax multiplier is
A) larger than the government expenditure multiplier.
B) negative.
C) smaller than the government expenditure multiplier.
D) equal to the government expenditure multiplier.

Question

Quizplus · Accepted Answer

The autonomous tax multiplier is smaller than the government expenditure multiplier because when taxes are increased, it reduces the disposable income of individuals and decreases spending, leading to a smaller overall increase in aggregate demand compared to an increase in government expenditure.

The Autonomous Tax Multiplier Is