Figure 23-4 -Refer to Figure 23-4. Potential GDP Equals $500 Billion. the $500

question 99

Multiple Choice

Figure 23-4
-Refer to Figure 23-4. Potential GDP equals $500 billion. The economy is currently producing GDP₁ which is equal to $450 billion. If the MPC is 0.8, then how much must autonomous spending change for the economy to move to potential GDP?

• A) -$40 billion
• B) -$10 billion
• C) $10 billion
• D) $40 billion

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Definitions:

Taxable Income

The amount of income that is used to calculate an individual's or a company's income tax due. It is the gross income minus deductions and exemptions allowed by the tax code.

Adjusted Gross Income (AGI)

The total gross income minus specific deductions defined by the IRS, used to determine taxable income.

Qualifying Relative

A term used in tax law to describe someone who doesn’t have to live with the taxpayer all year but must meet certain financial support and income criteria to be claimed as a dependent.

Gross Income Test

A requirement for determining if someone can be claimed as a dependent, based on their income level.