For any given change in taxes, the multiplier
A)will work indirectly through consumption.
B)effect will occur in two steps.
C)effect will be smaller than for an equivalent dollar change in government spending.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The tax multiplier works indirectly through consumption, occurs in steps, and is generally smaller than the government spending multiplier due to the initial impact on disposable income.

For Any Given Change in Taxes, the Multiplier