Question

In the Keynesian-cross model with a given MPC >0, the government-expenditure multiplier ______ the tax multiplier.

Answer 1

Answer:

the government-expenditure multiplier _Is larger than_ the tax multiplier.

Is larger than

Explanation:

Keynesian Cross Model otherwise known as expenditure-output model is used to determine the point where total or aggregate expenditures in the economy are intercept the amount of output produced, i.e equilibrium level of real GDP. In economy, if MPC >0, the government-expenditure multiplier is larger than the tax multiplier.