Refer to the Above Data

question 54

Multiple Choice

Refer to the above data.If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, we can conclude that the tax:

• A)enhances the economy's built-in stability.
• B)reduces the economy's built-in stability.
• C)neither increases nor decreases built-in stability.
• D)increases the MPC and therefore increases the size of the multiplier.

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Definitions:

Balance Theory

A theory in social psychology suggesting that individuals seek consistency and balance among their beliefs, attitudes, and sentiments in relation to others.

Unit Relation

The connection and interdependence between individual components within a system or structure, determining how they function together as a whole.

Sentiment Relation

Sentiment Relation refers to the connection between emotions and attitudes and how they influence each other in the context of communication or analysis.

Associative Relation

A connection or link between two concepts or entities where one is reminded of the other.