If the Consumption Function Is C = 200 + 0

question 189

Multiple Choice

If the consumption function is C = 200 + 0.8Y and there is a $10 million increase in investment spending, then the aggregate demand curve will shift horizontally to the right by:

• A) $8 million.
• B) $12.5 million.
• C) $2 million.
• D) $50 million.

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Definitions:

Tax Revenue

The income that is obtained by governments through taxation, which is then used to fund public services and government operations.

Lump-Sum Taxes

Taxes that are a fixed amount, regardless of the taxed person's income, wealth, or other attributes that could affect their ability to pay.

Low-Income Taxpayers

Individuals with earnings below a certain threshold, often eligible for certain tax benefits or lower tax rates.

Vertical Equity

The idea that taxpayers with a greater ability to pay taxes should pay larger amounts.