Consider a Consumption Function in a Simple Macro Model with Government

question 23

Multiple Choice

Consider a consumption function in a simple macro model with government and taxes.Given a marginal propensity to consume out of disposable income of 0.8 and a net tax rate of 20% of national income,the marginal propensity to consume out of national income is

• A)0.36.
• B)0.64.
• C)0.80.
• D)0.90.
• E)1.00.

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Definitions:

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