If the tax multiplier is -4 and taxes are reduced by $35 billion, output1.falls by $140 billion.2.increases by $140 billion.

The data presented in the question above is:- Tax multiplier = -4 Reduction in taxes = $35 billion…

Answered: If the tax multiplier is -4 and taxes…

If the tax multiplier is -4 and taxes are reduced by $35 billion, output falls by $140 billion. increases by $140 billion. 1. 2.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.5P: Explain the difference between the government purchases multiplier and the net tax multiplier. If...

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If the tax multiplier is -4 and taxes are reduced by $35 billion, output
1.
falls by $140 billion.
2.
increases by $140 billion.

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