Question: Rise. The fall in spending from an increase in taxes is always less than the change in taxes because the marginal propensity to consume is

Rise. The fall in spending from an increase in taxes is always less than the change in taxes because the marginal propensity to consume is less than 1. By contrast, autonomous spending rises one-for-one with a change in autonomous consumer expenditure. If taxes and autonomous consumer expenditure rise by the same amount, autonomous spending must rise, and aggregate output also rises.

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