When taxes depend on income, a higher tax rate implies a higher government spending multiplier.

Name: When taxes depend on income, a higher tax rate implies a higher government spending multiplier.
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Question

Quizplus · Accepted Answer

A higher tax rate reduces disposable income, which can dampen the increase in consumption and overall economic activity from government spending, potentially leading to a lower government spending multiplier.

When Taxes Depend on Income, a Higher Tax Rate Implies