If Lump-Sum Taxes Are Decreased by $10 Billion and the Equilibrium

question 152

Multiple Choice

If lump-sum taxes are decreased by $10 billion and the equilibrium GDP increases by $40 billion as a result, we can conclude that:

• A)the expenditures multiplier is 4.
• B)the MPC for this economy is .8.
• C)the MPC for this economy is .6.
• D)the expenditures multiplier is 3.