Consider a Consumption Function in a Simple Macro Model with Government

question 108

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 0.7 and a net tax rate of 30% of national income,the marginal propensity to consume out of national income is

• A)0.49.
• B)0.58.
• C)0.70.
• D)0.90.
• E)1.00.

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Definitions:

Primary

Refers to the first or most significant in order or importance.

Tertiary

Relating to the third level or stage of something; in education, it refers to post-secondary education such as universities and colleges.

Normative Approach

An aspect of ethics that concerns the criteria of what is right or wrong, focusing on the moral standards that guide behavior within a society or organization.

Stakeholder Demands

The expectations or requirements that individuals or groups with an interest or stake in an organization seek to be fulfilled or addressed.