Suppose initially the marginal propensity to consume in an economy is 0.75 and the tax rate is zero. In order to increase revenue, the government now introduces income tax at the rate of 20 per cent of the income. This change would cause multiplier to * O Go up by 60% O Go down by 60% Go up by 37.5% Go down by 37.5%

Suppose initially the marginal propensity to consume in an economy is 0.75 and the tax rate is zero. In order to increase revenue, the government now introduces income tax at the rate of 20 per cent of the income. This change would cause multiplier to * O Go up by 60% O Go down by 60% Go up by 37.5% Go down by 37.5%

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 1WNG

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