Suppose Output Is Demand Determined

question 90

Multiple Choice

Suppose output is demand determined.An increase in the net tax rate ________ the marginal propensity to spend and thus ________ the simple multiplier.

• A)raises; raises
• B)raises; lowers
• C)causes no change in; raises
• D)lowers; lowers
• E)lowers; raises

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Definitions:

Profit Maximization

A business strategy aimed at achieving the highest possible profit within a given period, usually through the optimization of sales and production costs.

Pricing Objective

The goals that a company aims to achieve through its pricing strategy, such as maximizing profits, increasing market share, or discouraging competition.

Tariffs

Taxes or duties to be paid on particular imports or exports, often used by governments to control trade, protect domestic industries, or generate revenue.

Price Competitive

Refers to a pricing strategy where a company sets its product or service prices to be as competitive as possible, often matching or undercutting competitors.