Notes7-10 - in government spending Simple Tax Multiplier:...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Fiscal Policy: manipulation of government spending, taxes, and transfer payments to promote macroeconomic goals of economic growth and price stability Lump Sum Tax: a tax independent of the level of income The multiplier effect of a change in taxes is smaller than the multiplier effect of changes
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: in government spending Simple Tax Multiplier: MPC / MPS Whenever government changes taxes and spending by the same amount, GDP will change by that amount Changes in government spending have exactly the same multiplier effects as do changes in investment (change in spending / (1/MPS))...
View Full Document

This note was uploaded on 10/17/2011 for the course EC 202 taught by Professor Obst during the Summer '08 term at Michigan State University.

Ask a homework question - tutors are online