Question

Changes in taxes first cause changes in _____, and thus the government tax multiplier is _____ than the government spending multiplier.

Answer 1

Changes in taxes first cause changes in disposable income, and thus the government tax multiplier is smaller than the government spending multiplier.

Answer 2

Changes in taxes first cause changes in disposable income, and thus the government tax multiplier is smaller than the government spending multiplier.
Spending multiplier, which is also called fiscal multiplier shows or represent the multiple by which GDP increments or declines because of an expansion and reduction in government uses and venture.
Tax multiplier refers to the multiple by which GDP increments or declines because of an expansion and reduction in taxes that are charged by governments.The two types of tax multiplier are, simple tax multiplier and complex type multiplier.