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:

Opportunity Cost

The value of the next best alternative that must be foregone as a result of making a decision.

Bowling

A sport or leisure activity in which a player rolls or throws a bowling ball towards pins or another target.

Billiards

A cue sport that encompasses a wide variety of games involving pool tables, cue sticks, and balls, where players strike balls to score points based on game-specific rules.

Limited Resources

The finite availability of inputs (like labor, capital, and land) that are used for the production of goods and services.