객관식
Which of the following is an example of an automatic stabilizer (automatic fiscal policy)?
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19. Fiscal Policy
Taxes, the Multiplier Effect, and Automatic Stabilizers
객관식
How do you calculate the tax multiplier?
A
-1 / (1 - MPC)
B
MPC / (1 - MPC)
C
-MPC / (1 - MPC)
D
1 / (1 - MPC)
검증된 단계별 안내1
Understand that the tax multiplier measures the change in aggregate output (GDP) resulting from a change in taxes, reflecting how taxes influence consumption and overall demand.
Recall the marginal propensity to consume (MPC), which is the fraction of additional income that households spend on consumption rather than saving.
Recognize that when taxes change, disposable income changes, which affects consumption by the amount MPC times the change in taxes.
Use the formula for the tax multiplier, which is derived from the spending multiplier but adjusted for the effect of taxes: the tax multiplier equals the negative MPC divided by (1 minus MPC). Mathematically, this is expressed as: \(-\frac{MPC}{1 - MPC}\).
Interpret the negative sign as indicating that an increase in taxes reduces aggregate demand, while a decrease in taxes increases it, scaled by the MPC and the multiplier effect.
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