The tax multiplier is negative because increases in taxes lead to decreases in consumer spending.

Name: The tax multiplier is negative because increases in taxes lead to decreases in consumer spending.
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Question

Quizplus · Accepted Answer

The tax multiplier is negative because when taxes increase, people have less disposable income to spend, which decreases their overall consumption and decreases aggregate demand in the economy.

The Tax Multiplier Is Negative Because Increases in Taxes Lead