Which of the following is true?

Question

Quizplus · Accepted Answer

The tax multiplier measures the effect of changes in taxes on aggregate demand while the government spending multiplier measures the effect of changes in government spending on aggregate demand. The tax multiplier is smaller because a tax cut may not necessarily result in an equal increase in consumer spending, as some consumers may save the extra income. On the other hand, government spending results in direct and immediate injection of money into the economy, leading to a larger multiplier effect.

Which of the Following Is True