Consider a Simple Macro Model with a Constant Price Level

question 21

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The marginal propensity to spend out of national income,z,can be expressed as ________ (where t = net tax rate and m = marginal propensity to import) .

• A)z = MPC(1 - t - m)
• B)z = tY - mY
• C)z = MPC - (1 - t- m)Y
• D)z = MPC - (1 - t - m)
• E)z = MPC(1 - t)- m

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Definitions:

Tax Burden

The total amount of taxes that individuals, businesses, or other entities are obligated to pay, often expressed as a percentage of income or GDP.

Consumers

Individuals or organizations that use economic goods and services.

Keynes-Hayek

Refers to the economic theories and public debate between John Maynard Keynes and Friedrich Hayek, two prominent economists with differing views on government intervention in the economy.

Government Intervention

The act by which a government takes actions to affect or influence the economy, markets, or individual activities, often to correct market failures or achieve a more equitable distribution of resources.