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Consider a Consumption Function in a Simple Macro Model with Government

Question 108

Multiple Choice

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.7 and a net tax rate of 30% of national income,the marginal propensity to consume out of national income is


A) 0.49.
B) 0.58.
C) 0.70.
D) 0.90.
E) 1.00.

Correct Answer:

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