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Calculating out this question, What would happen to the marginal propensity to save when a tax cut was enacted causing the multiplier to change to
- Calculating out this question, "What would happen to the marginal propensity to save when a tax cut was enacted causing the multiplier to change to 5?", I get that MPS would decrease by 1/5. Why would a tax cut cause a decrease in MPS? I would expect having more money in your pocket would mean more money in savings... I'm confused.
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