In our earlier videos, we have seen, first, very generally, how any change in autonomous demand shifts aggregate demand, then , secondly, we saw specifically, how a change in government spending affects aggregate demand and how do you calculate government expenditure multiplier and now, we will look into the effects of a change in lumpsum tax and its affect on aggregate demand.
More specifically, we will cover following three issues in this series
- How does the reduction in lump sum tax affects aggregate demand?
- How do you calculate taxation multiplier?
- Numerical example to calculate taxation multiplier
Effect of an increase in taxes affect aggregate demand
How to calculate tax multiplier?
Numerical example tax multiplier