A $10 billion reduction in taxes increases Real GDP by $60 billion.Assuming a constant price level,what does the tax multiplier equal?

Name: A $10 billion reduction in taxes increases Real GDP by $60 billion.Assuming a constant price level,what does the tax multiplier equal?
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Question

Quizplus · Accepted Answer

The tax multiplier is calculated by dividing the change in Real GDP by the change in taxes. In this case, a $60 billion increase in Real GDP divided by a $10 billion reduction in taxes equals 6.

A $10 Billion Reduction in Taxes Increases Real GDP by $60