He also spawned a generation of economists who searched for new tools to foster growth in potential GDP, i.e. how to make the economy grow. Growth theory is now a recognized sub-discipline of the economics profession. An increase or decrease will change aggregate expenditure more than the initial change via three fiscal policy multipliers assuming the very short-run and a constant price level. MPC, however, is assumed to be constant. There are essentially two kinds of taxes - induced and autonomous.
Induced taxes rise and fall as real GDP varies.
Taxes increase or decrease as real GDP changes. In this way they act as an automatic stabilizer. Autonomous taxes do not vary with real GDP rather they are fixed by Government. An increase in taxes decreases disposable income and hence consumption and therefore aggregate expenditure. The inverse of the ATM is the multiplier associated with transfers.