About this document

Impacts of Lump Sum Tax on GDP by Bob Joe is a document available to read on EtoBox.

The document explains that the economic reason a larger marginal propensity to consume (MPC) results in a larger multiplier is that at each round of the multiplier process, the leakage into savings is smaller when the MPC is larger. This is because a larger MPC leads to greater consumption at each round, as less of each additional dollar of income is saved. The larger consumption results in a greater total impact on aggregate demand and output from any initial change in autonomous spending.

Author

Bob Joe

Language

EN