In Our Simple Macro Model with Government,consider the Equation Y_D

question 53

Multiple Choice

In our simple macro model with government,consider the equation Y_D = (0.75) Y.Which of the following statements about this equation is correct?

• A)If disposable income increases by $0.75,then national income increases by $1.00 and total tax revenue rises by $0.75.
• B)Net tax revenue is equal to 75% of national income.
• C)If national income increases by $1.00,then disposable income increases by $0.75 and net tax revenue increases by $0.25.
• D)Net tax revenue is equal to 25% of disposable income.
• E)If national income increases by $1.00,then disposable income increases by $0.25 and net tax revenue increases by $0.75.

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