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.