The intuitive reason that the multiplier works is that * government is the only force with power large enough to change equilibrium output an initial change in autonomous Aggregate Demand leads to more output, which gives consumers more income, a portion of which they spend, thus increasing output and income even more. an initial change in Aggregate Demand leads to an equal and offsetting change in Aggregate Supply. an initial change in Aggregate Demand leads to higher levels of income, which are O then saved. The value of the output multiplier with an MPC of 0.75 and proportional taxes of 0.20 (20%) is O 1 2.5 3.33 5 None of the above ★
The intuitive reason that the multiplier works is that * government is the only force with power large enough to change equilibrium output an initial change in autonomous Aggregate Demand leads to more output, which gives consumers more income, a portion of which they spend, thus increasing output and income even more. an initial change in Aggregate Demand leads to an equal and offsetting change in Aggregate Supply. an initial change in Aggregate Demand leads to higher levels of income, which are O then saved. The value of the output multiplier with an MPC of 0.75 and proportional taxes of 0.20 (20%) is O 1 2.5 3.33 5 None of the above ★
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
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Transcribed Image Text:The intuitive reason that the multiplier works is that *
government is the only force with power large enough to change equilibrium
output
an initial change in autonomous Aggregate Demand leads to more output, which
gives consumers more income, a portion of which they spend, thus increasing
output and income even more.
O
an initial change in Aggregate Demand leads to an equal and offsetting change in
Aggregate Supply.
an initial change in Aggregate Demand leads to higher levels of income, which are
then saved.
The value of the output multiplier with an MPC of 0.75 and proportional taxes *18
of 0.20 (20%) is
1
2.5
3.33
1점
5
O None of the above
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