WBCS.LIVE practice question

Proportional taxes would help to reduce the autonomous expenditure multiplier because ______.

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Axes increase the MPC
  2. MPC does not have any role in it
  3. Axes and MPC become equal
  4. Taxes reduce the MPC

Correct answer and explanation

Correct answer: Taxes reduce the MPC