Answer:
-3
Explanation:
The computation of the tax multiplier is shown below:
Multiplier = MPC ÷ (1 - MPC)
where,
MPC = Marginal propensity to consume = -0.75
1 - MPC = 1 - marginal propensity to consume = 1 - 0.75 = 0.25
Now placing these values to the above formula
So, the tax multiplier is
= -0.75 ÷ 0.25
= -3
We simply applied the above formula of the multiplier and the same is to be considered to determine the tax multiplier
