As the tax rate decreases, the absolute value of the tax multiplier

Name: As the tax rate decreases, the absolute value of the tax multiplier
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Quizplus · Accepted Answer

The tax multiplier is negatively related to the marginal propensity to consume (MPC). As the tax rate decreases, disposable income increases, leading to an increase in consumption and aggregate demand. This amplifies the effect of a change in taxes on the economy, thus increasing the absolute value of the tax multiplier.

As the Tax Rate Decreases, the Absolute Value of the Tax