Multiple Choice
According to the Keynesian-cross analysis, if MPC stands for marginal propensity to consume, then a rise in taxes of ΔT will:
A) decrease equilibrium income by ΔT.
B) decrease equilibrium income by ΔT / (1 - MPC) .
C) decrease equilibrium income by ΔT (MPC) / (1 - MPC) .
D) not affect equilibrium income at all.
Correct Answer:
Verified
Correct Answer:
Verified
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