Why is the effect of a change in taxes on the government budget balance less than the same sized change in government expenditure?

Question

Accepted Answer

The change in consumption expenditure is equal to  MPC  times the tax change.

Answer

Tax rates are the same regardless of income levels.

Answer

Some people do not pay their taxes.

Answer

The change in government expenditure is not directly affected by consumption expenditure.

Answer

The change in consumption expenditure is equal to  MPS  times the tax change.

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