What measure can be used to determine the final impact on aggregate demand that occurs as a result of the change in lump-sum tax

Question

Alexeev081 [22]

3 years ago

7

What measure can be used to determine the final impact on aggregate demand that occurs as a result of the change in lump-sum tax

es?

Advanced Placement (AP)

1 answer:

zhenek [66] · Answer 1 · 2022-03-13T00:31:19+03:00

Answer:

The tax multiplier

Explanation:

The tax multiplier can be regarded as the huge effect of change that occur in taxes on aggregate demand, when there is decrease in taxes then the effect is felt on income as well as consumption due to increase in government spending. Spending multiplier is is bigger compare to tax multiplier. It should be noted that tax multiplier is used to determine the final impact on aggregate demand that occurs as a result of the change in lump-sum taxes.