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Most macroeconomists believe it is a good thing that taxes act as automatic stabilizers and lower the size of the multiplier. However, a smaller multiplier means that the change in government purchases of goods and services, government transfers, or taxes necessary to close an inflationary or recessionary gap is larger. How can you describe this apparent inconsistency?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M968128

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