Explain carefully why the tax multiplier [Y/T = -b / (1 - b)] is negative and why

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Explain carefully why the tax multiplier [ΔY/ΔT = -b / (1 - b)] is negative and why it is smaller in absolute value than the government expenditure multiplier [ΔY/ΔG = 1/(1 - b)].

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Macroeconomics Theories and Policies

ISBN: 978-0132831529

10th edition

Authors: Richard T. Froyen

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Question Posted: May 24, 2016 06:43 AM

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Explain carefully why the tax multiplier [Y/T = -b / (1 - b)] is negative and why

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Macroeconomics Theories and Policies

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