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Assume Autonomous Net Taxes Rise by $500, and the Marginal

Question 106

Multiple Choice

Assume autonomous net taxes rise by $500, and the marginal propensity to consume equals 3/4.Net exports, planned investment, taxes, and government purchases are autonomous and remain fixed.How will disposable income initially change?  


A)  It will rise by $500. 
B)  It will fall by $375. 
C)  It will fall by $500. 
D)  It will fall by $2,000.

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