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If the government spending multiplier is 6 what is the tax multiplier?
9
If you know tax multiplier how do you figure government spending multiplier?
you could do it two ways .If you have the MPC could divide it
IS the tax multiplier always positive?
tax multiplier is always negative not positive, because of downward sloped aggregte demand curve
What is tax multiplier?
The formula for this simple tax multiplier. (m[tax]), is: m[tax] = - MPC x 1 ---- MPS = - MPC ---- MPS Where MPC is the marginal propensity to consume and MPS is the marginal propensity to save. This formula is almost identical to that for the simple expenditures multiplier. The only difference is the inclusion of the negative marginal propensity to consume (- MPC). If, for example, the MPC is 0.75 (and the MPS is 0.25), then an autonomous $1 trillion change in taxes results in an opposite change in aggregate production of $3 trillion.
What is the 2 worth in the multiplication problem 2 by 1?
The 2 is a multiplier
