Principles of Macroeconomics / Unit 9 MAC 0827 short lesson, about 20 seconds
The Tax Multiplier
Captions available
The idea
A tax cut does not raise spending by its full amount. Households consume only a fraction, so the line shifts by the propensity to consume times the tax change.
In practice
So output moves less than an equal increase in government purchases would move it.
Where people slip
Neither source names this multiplier; both derive it. The course supplies the name.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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