The multiplier will be greater, other things being equal:

Question

Quizplus · Accepted Answer

All of these answers are true. A smaller fraction of each dollar going to taxes means that households and firms have more money to spend and invest, resulting in increased consumption and investment expenditures, which increase the multiplier effect. A smaller fraction of each dollar of disposable income spent on imports means that more money stays within the domestic economy, leading to increased circulation of money and a larger multiplier effect. Lastly, a smaller fraction of each dollar of disposable income going to saving means that more money is spent on consumption and investment, which increases the multiplier effect.

The Multiplier Will Be Greater, Other Things Being Equal