Tax Multiplier Calculator (Simple)
Tax Multiplier Calculator (Complex)
What is the tax multiplier?
The tax multiplier calculates the amount that a decrease in taxes will generate in the economy.
A higher tax multiplier means that more economic activity will be created, a lower tax multiplier means that less economic activity will be generated.
Where MPC = Marginal Propensity to Consume
- MPC = Marginal Propensity to Consume
- MPT = Marginal Propensity to Tax
- MPI = Marginal Propensity to Invest
- MPG = Marginal Propensity of Government Expenditures
- MPM = Marginal Propensity to Import
Sources and more resources
- Khan Academy – Tax Multiplier, MPC, and MPS – Part of an educational course on Macroeconomics. It demonstrates the tax multiplier as well as marginal propensity to consume and save.
- Wikipedia – Fiscal multiplier – A quick overview of fiscal multipliers (including the tax multiplier).
- BYU Idaho – Econ 151 – Economic Principles and Problems – Macro – Aggregate Expenditures Model – An overview of the aggregate expenditures model, including the tax multiplier.
- ACDC Leadership (YouTube) – Macro 3.12 – Multiplier and Taxes Practice – An overview video on the tax multiplier.
- XplainD – Tax Multiplier – A summary of the tax multiplier including formulas.