If the Savings Function Is S = - 400

question 8

Multiple Choice

If the savings function is S = - 400 + (0.25) YD, the marginal income tax rate is t = 0.2, and the equilibrium level of income increases by 1,000, by how much will consumption change?

• A)250
• B)400
• C)600
• D)750
• E)800

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