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true or false An increase in the marginal tax rate increases the investment multiplier, while an...

true or false

An increase in the marginal tax rate increases the investment multiplier, while an increase in the marginal propensity to consume lowers it.

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Answer False It is not true that an increase in the marginal tax rate increases the investment multiplier, while an increase in the marginal propensity to consume lowers it.

Investment multiplier is multiple time increase in the national income due to the primary injection of autonomous investment. Marginal propensity to consume increases the investment multiplier. Marginal propensity to consume is injection for multiplier. Higher the marginal propensity to consume higher is multiplier. Marginal tax is leakage and decreases the investment multiplier.

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