The government expenditure multiplier and the tax multiplier are

Question

Quizplus · Accepted Answer

The government expenditure multiplier and tax multiplier are both measures of the impact of fiscal policy on GDP, but they have different magnitudes. The government expenditure multiplier measures the change in GDP resulting from a change in government spending, while the tax multiplier measures the change in GDP resulting from a change in taxes. Because the government expenditure multiplier is larger than the tax multiplier, a given change in government spending will have a larger impact on GDP than the same size change in taxes. Therefore, choice C is the best answer.

The Government Expenditure Multiplier and the Tax Multiplier Are