MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
Question
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Chapter 11, Problem 2DQ
To determine

To describe: The reasons behind G having the same multiplier as I but taxes are having smaller multiplier.

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Students have asked these similar questions
Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have to do with the government purchases multiplier?
Suppose government purchases increase by 10 billion dollars, and as a result, real GDP increases by 15 billion dollars. Calculate the multiplier. Explain why the multiplier is generally greater than 1.
Explain the basic idea of the expenditure multiplier and the role consumers' play.
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