Solved

The Government Raises Lump-Sum Taxes on Income by $100 Billion

Question 99

Multiple Choice

The government raises lump-sum taxes on income by $100 billion, and the neoclassical economy adjusts so that output does not change. If the marginal propensity to consume is 0.6, public saving:


A) rises by $100 billion.
B) rises by $60 billion.
C) falls by $60 billion.
D) falls by $100 billion.

Correct Answer:

verifed

Verified

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

Related Questions

Q94: According to the neoclassical theory of distribution,

Q95: What effect does advancement in technology have

Q96: If the consumption function is given by

Q97: The supply and demand for loanable funds

Q98: In equilibrium, total investment equals:<br>A) private saving.<br>B)

Q100: Consider a production function for an economy:<br>Y

Q101: Use the model developed in Chapter 3

Q102: Suppose that GDP (Y) is 5,000. Consumption

Q103: In the neoclassical model with fixed income,

Q104: If output is described by the production