If a $10 Billion Decrease in Lump-Sum Taxes Increases Equilibrium

question 5

Multiple Choice

If a $10 billion decrease in lump-sum taxes increases equilibrium GDP by $40 billion, then

• A)the multiplier is 4.
• B)the MPC for this economy is 0.8.
• C)the MPC for this economy is 0.6.
• D)the multiplier is 3.

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Definitions:

Cognitive Dissonance

A psychological phenomenon that occurs when a person holds contradictory beliefs, ideas, or values, leading to psychological stress or discomfort.

Selective Exposure

The process of allowing only a portion of the information revealed to be organized, interpreted, and permitted into awareness.

Benefits Important To The Prospect

Features or aspects of a product or service that are particularly valued or needed by a potential client or customer.

Unique Product Features

Specific characteristics of a product that set it apart from competitors' offerings in the market.