Let Y = Real GDP and Y_d = Disposable Income

Multiple Choice

Let Y = real GDP and Y_d = disposable income. Suppose initially, Y = Y_d and the marginal propensity to consume (MPC) is 0.8. All components of aggregate expenditures except consumption are autonomous. Now suppose the government imposes an income tax rate of 30% on real GDP. As a result, one additional dollar will increase consumption by

A) $0.24.
B) $0.30.
C) $0.56.
D) $0.50.