Consider a Consumption Function in a Simple Macro Model with Government

question 119

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 0.9 and a net tax rate of 10% of national income,the marginal propensity to consume out of national income is

• A)0.09.
• B)0.72.
• C)0.81.
• D)0.90.
• E)1.00.

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Definitions:

Need to Belong

The need to belong is a fundamental human motivation to form and maintain strong, stable interpersonal relationships.

Trait Self-control

The personality characteristic that involves the ability to regulate one’s thoughts, feelings, and behaviors to achieve long-term goals.

Universal

Applicable everywhere or in all cases; general or widespread in nature.

Cultures

The shared beliefs, practices, norms, and values of a group of people that shape their behavior and interactions.