The tax multiplier is the
A)magnification effect of a change in taxes on aggregate demand.
B)magnification effect of a change in taxes on the budget deficit.
C)magnification effect of a change in taxes on government expenditures.
D)magnification effect of a change in taxes on aggregate supply.
E)magnification effect of a change in taxes on the national debt.

Question

Quizplus · Accepted Answer

The tax multiplier is the magnification effect of a change in taxes on aggregate demand. It measures how much a change in taxes will impact aggregate demand, and therefore the economy as a whole. A higher tax multiplier means that changes in taxes will have a larger impact on aggregate demand.

The Tax Multiplier Is the