If the tax multiplier is - 5 and taxes are reduced by £200 million, output

Name: If the tax multiplier is - 5 and taxes are reduced by £200 million, output
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The tax multiplier effect indicates how much output changes in response to a change in taxes. A tax multiplier of -5 means that for every £1 reduction in taxes, output increases by £5. Therefore, reducing taxes by £200 million would increase output by £1 billion (£200 million * 5).

If the Tax Multiplier Is - 5 and Taxes Are