Assume the MPC Is

question 148

Multiple Choice

Assume the MPC is .8.If government were to impose $50 billion of new taxes on household income, consumption spending would decrease by:

• A)$100 billion.
• B)$40 billion.
• C)$90 billion
• D)$50 billion.

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Definitions:

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Twin Deficits

The situation where a country has both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports).

Interest Rates

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

U.S. Trade Deficits

occur when the total value of goods and services the United States imports exceeds the value of what it exports.