Im trying to figure out what initial and additional effects would a 20 thousand dollar tax reduction with a 3/4 marginal propensity to consume would have on the aggregate demand. I first thought of calculating the tax multiplier = $ - MPC / (1 - MPC)= -3 $

Does this mean that this has a 60 thousand increase on the aggregate demand? $-3* -20 000 = 60 000 $

What would be the afterwards effect and total effects? Any help is appreciated :)



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