The government spending multiplier is higher as:

Higher is the government spending

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Higher is the MPC

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Lower is the MPC

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Lower is the tax revenue

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Solution

The correct option is B
Higher is the MPC

The multiplier is directly proportional to the MPC.

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Similar questions

If the tax rate is 0.5 and the MPC is 0.4, what is the government spending multiplier?

Why is the tax multiplier smaller than the government spending multiplier?

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