Scenario 34-1

question 37

Multiple Choice

Scenario 34-1. Take the following information as given for a small economy:
• When income is $10,000, consumption spending is $6,500.
• When income is $11,000, consumption spending is $7,250.
-Refer to Scenario 34-1. The marginal propensity to consume for this economy is

• A)0.650.
• B)0.750.
• C)0.650 or 0.664, depending on whether income is $10,000 or $11,000.
• D)0.800.

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Definitions:

Federal Tax Legislation

Laws passed by the United States Congress that relate to taxes imposed by the federal government.

Senate Finance Committee

A powerful committee in the United States Senate that deals with matters related to taxation, revenue, and other financial policies.

Form 1040EZ

Form 1040EZ was a simplified tax form for individuals with uncomplicated tax situations, but it is no longer in use as of 2018.

Taxable Wages

Earnings from employment or other services that are subject to taxation, after accounting for deductions and exemptions.