Multiple Choice
If the marginal propensity to consume is 0.8 and the proportional income tax rate is 0.25, by how much would the equilibrium level of real GDP demanded increase if government purchases rose by $50 billion?
A) $50 billion
B) $100 billion
C) $500 billion
D) $125 billion
E) $275 billion
Correct Answer:
Verified
Correct Answer:
Verified
Q2: If the government increased autonomous net taxes
Q3: With a proportional income tax,<br>A)each individual pays
Q4: In a model with a proportional income
Q5: If the MPC is equal to .75
Q6: Suppose that government purchases increase by $200
Q8: A $100 increase in autonomous government purchases
Q9: The balanced budget multiplier is equal to<br>A)1<br>B)1
Q10: If the MPC equals the 2/3, then
Q11: The balanced budget multiplier<br>A)increases as MPC increases<br>B)increases
Q12: When we relax the assumption that net