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(Govern Up! (Taxes? (Tax Multiplier (MPC x Multiplier, Normal Multiplier…
Govern Up!
Fiscal
Multiplier
Taxes?
Lump Sum Tax
:small_red_triangle: Consumption
Tax x MPC
:arrow_down: GDP
#
#
:small_red_triangle: C x Multiplier
Ca = After Tax Income
Tax Multiplier
MPC x Multiplier
Normal Multiplier >
:small_red_triangle: GDP = Tax x mpc x multiplier
Balanced Budget Multiplier
1
Equilibrium vs. Full Employment
AE < Full
Recessionary AE Gap
Unoutput
Unemployment
Policy
T :arrow_down:
G :arrow_up:
Insufficient Spending
AE > Full
Inflationary AE Gap
Demand Pull Inflation
Policy
T :arrow_up:
G :arrow_down:
Example
652, 654
Assumptions
AE
GDP
Independent
Government
Impact :no_entry:
Private
Question
Balanced Budget Multiplier
Equ'm vs. NRU
