Will collect more tax revenue when the tax base grows

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will collect more tax revenue when the tax base grows. Just the reverse is true in a recession. Likewise some government transfers will move in the opposite direction of the state of the economy. For instance, if the economy expands the number of people on the welfare rolls and collecting unemployment compensation will decline. Again, these expenditures will rise when the economy is in recession.
12. Discuss an important difference between the spending and tax multipliers.
13. Determine the net impact upon the nation's economy that results from equal increases in spending and taxes of $10 billion when the MPC is .8.
14. Suppose that the MPS = .2 and the government is interested in raising the level of output in the economy by $100 billion. Calculate how much the government would have to spend to achieve this objective.
15. Assume that the government spending multiplier is equal to 5. Calculate the tax multiplier from this information.

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