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The spending multiplier and tax multiplier will cause a $1 change in spending or taxes to lead to further changes in AD and aggregate output. The spending multiplier is always 1 greater than the tax multiplier because with taxes some of the initial impact of the tax is saved, which is not true of the spending multiplier.
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- Knovation Readability Score: 5 (1 low difficulty, 5 high difficulty)
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