Why Is the Tax Multiplier Smaller (In Absolute Value)than the Autonomous

question 59

Essay

Why is the tax multiplier smaller (in absolute value)than the autonomous spending multiplier?

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Definitions:

Personal Liability

The legal responsibility of an individual to bear the burden of debt or obligation from his/her actions, separate from the liability of a business entity or corporation.

Control of Business

Refers to the authority or power to manage the operations, decisions, and policies of a company or organization.

Split Profits

The distribution of earnings or gains between partners, stakeholders, or businesses according to agreed-upon percentages or criteria.

Sole Proprietorship

A business owned and operated by a single individual where there is no legal distinction between the owner and the business entity.