Refer to the Above Table

question 52

Multiple Choice

Refer to the above table.If an additional lump-sum tax of $20 were imposed, we would expect:

• A)equilibrium GDP to fall by $30.
• B)equilibrium GDP to fall by $20.
• C)equilibrium GDP to fall by $50.
• D)equilibrium GDP to rise by $24.

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or output, such as materials and labor costs.

Fixed Cost

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

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating revenues, excluding taxes and interest.

EBIT

A financial performance metric that calculates a company's profits before accounting for interest and income tax costs, including all other expenses.