The tax multiplier equals change in equilibrium real GDP divided by change in taxes.
In economics, the term "tax multiplier" refers to the degree to which GDP will be affected by a change in taxes. With the use of this instrument, the government can adjust taxes to exactly the level required to enhance GDP (decline). As opposed to making an educated guess, this enables the government to modify taxes precisely. There won't be a 10% increase in aggregate demand if taxes are cut by 10%. The explanation for this can be seen in the above example of a paycheck, where we saw how someone may decide how much of a transfer to save and how much to spend. Your contribution to overall demand will depend on how much money you spend; your contribution won't depend on how much money you save.
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