Refer to the information provided in Table 9.8 below to answer the questions that follow.
Table 9.8
All Figures in Billions of Dollars

-Refer to Table 9.8. The value of the tax multiplier is

Question

Refer to the information provided in Table 9.8 below to answer the questions that follow.
Table 9.8
All Figures in Billions of Dollars
 
-Refer to Table 9.8. The value of the tax multiplier is

Quizplus · Accepted Answer

The tax multiplier is calculated as -MPC/(1-MPC). Without the specific values from Table 9.8, a general understanding is that the tax multiplier is negative (because an increase in taxes reduces disposable income and thus consumption) and its absolute value is one less than the spending multiplier, assuming the spending multiplier is derived from the same marginal propensity to consume (MPC). If the spending multiplier were 10 (implying an MPC of 0.9), the tax multiplier would be -9, as it incorporates the direct effect of the tax change on consumption and the indirect effects through the spending multiplier mechanism.

Refer to the Information Provided in Table 9