Proportional taxes help to reduce the autonomous expenditure multiplier because ______.

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Economics · Macroeconomics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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taxes reduce the effective marginal propensity to consume out of national income

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Answer 1

taxes reduce the effective marginal propensity to consume out of national income

Answer 2

taxes and the MPC become equal

Answer 3

the MPC does not play any role in determining the multiplier

Answer 4

taxes increase the marginal propensity to consume (MPC)

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