Tax Multiplier

Question 1

Tax multiplier formula

Answer 1

-MPC/MPS

Question 2

Relationship of tax multiplier and spending multiplier

Answer 2

Always 1 less than the spending multiplier

Question 3

How output is gonna change with an increase in taxes

Answer 3

consumers respond to increase in tax by buying less goods

Question 4

the ratio of the total change in real GDP caused by a change in taxes

Answer 4

Tax Multiplier

Question 5

a tax increase results in___

Answer 5

a decline in income

Question 6

complex tax multiplier formula

Answer 6

TMC = MPC /

1 − (MPC × (1 − MPT) + MPI + MPG + MPM)

Question 7

it is assumed that any change in tax affects all components of the GDP.

Answer 7

complex tax multiplier

Question 8

Delta T means?

Answer 8

Change in Tax

Question 9

To get the amount in change of disposable income because of the increase/decrease in tax, what is the formula

Answer 9

negative delta T(tax) times MPC

Question 10

Taxes change________

Answer 10

Disposable income

Question 11

Taxes and change in disposable income causes_______

Answer 11

changes in both consumption expenditures and saving

Question 12

To find the ultimate decrease in aggregate demand what formula to use if there is a tax cut

Answer 12

-tax times tax multiplier(-MPC/MPS)

Question 13

required change in government spending (delta G) equals

Answer 13

Aggregate Demand/K (Multiplier)

Question 14

To compute the total aggregate demand____

Answer 14

1st step: (Compute the tax multiplier) -MPC/MPS

2nd step: -(tax cut) times (Tax multiplier)