Suppose a $100 Autonomous Net Tax Is Introduced in an Economy

Multiple Choice

Suppose a $100 autonomous net tax is introduced in an economy with an MPC equal to 0.7.How will this affect consumption at each level of real GDP?  

A)  Consumption will increase by $100. 
B)  Consumption will decrease by $100. 
C)  Consumption will increase by $70. 
D)  Consumption will decrease by $70.