Which of the following is true of multipliers?

Question

Quizplus · Accepted Answer

The tax multiplier is generally smaller than the government spending multiplier because changes in taxes have a smaller impact on aggregate demand compared to changes in government spending. This is because when the government spends money, the money goes directly into the economy, whereas when taxes change, some people may save the extra money or use it to pay off debts, reducing the impact on aggregate demand.

Which of the Following Is True of Multipliers