Why does a reduction in taxes have smaller multiplier effect


Problem

1. Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?

2. Why is a $100 billion increase in government spending for goods and services more expansionary than a $100 billion decrease in taxes?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Macroeconomics: Why does a reduction in taxes have smaller multiplier effect
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