Solved

If the MPC Is Equal to

Question 16

Multiple Choice

If the MPC is equal to .75 and net taxes, government spending, investment and net exports are all autonomous, then a $1 billion dollar decrease in net taxes will


A) have no effect on real GDP
B) increase real GDP by $1 billion
C) increase real GDP by $2 billion
D) increase real GDP by $3 billion
E) increase real GDP by $4 billion

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q11: The balanced budget multiplier<br>A)increases as MPC increases<br>B)increases

Q12: When we relax the assumption that net

Q13: If the government wants to increase equilibrium

Q14: If the MPC = 0.8 and both

Q15: If the government raised transfer payments by

Q17: The _ the proportional tax rate, t,

Q18: An increase in autonomous government purchases will

Q19: The balanced budget multiplier is always negative.

Q20: The effect of a new proportional income

Q21: In which of the following situations will