In an Aggregate Expenditures Diagram the Imposition of a Lump-Sum

question 54

Multiple Choice

In an aggregate expenditures diagram the imposition of a lump-sum tax (T) will:

• A)not affect the C + I_g + X_n line.
• B)shift the C + I_g + X_n line upward by an amount equal to T.
• C)shift the C + I_g + X_n line downward by an amount equal to T.
• D)shift the C + I_g + X_n line downward by an amount equal to T * MPC.

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Definitions:

Total Cost

The complete amount of money spent on the production of goods or services, including all variable and fixed costs.

Break-even Point

The point at which total costs equal total revenue, with no profit or loss, indicating the minimum sales volume needed to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, excluding fixed costs.