The tax multiplier:
A)is negative.
B)is larger in absolute value as compared to the government purchases multiplier.
C)only works when taxes are cut.
D)is less than one.

Name: The tax multiplier: A)is negative. B)is larger in absolute value as compared to the government purchases multiplier. C)only works when taxes are cut. D)is less than one.
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Question

Quizplus · Accepted Answer

The tax multiplier is negative because an increase in taxes reduces disposable income, leading to a decrease in consumption and overall economic output.

The Tax Multiplier