Multiple Choice
Consider the general form of the consumption function in a simple macro model.Once government and taxes are included in the model,desired consumption can be expressed as ________,where a = autonomous consumption,t = net tax rate,Y = national income,YD = disposable income,and MPC = marginal propensity to consume.
A) C = a + MPC(1 - t) YD
B) C = a - (1 - t) YD
C) C = a + MPC ∙ Y
D) C = a + MPC ∙ t ∙ YD
E) C = a + MPC(1 - t) Y
Correct Answer:
Verified
Correct Answer:
Verified
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