Consider a Simple Macro Model with a Constant Price Level

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import) .

A) z = MPC(1 - t - m)
B) z = tY - mY
C) z = MPC - (1 - t- m) Y
D) z = MPC - (1 - t - m)
E) z = MPC(1 - t) - m