If the MPC Is 2/3, the Initial Impact of an Increase

question 44

Multiple Choice

If the MPC is 2/3, the initial impact of an increase of $12 billion in lump-sum taxes will be to cause

• A)a rightward shift in the investment demand schedule.
• B)an $8 billion downshift in the consumption schedule.
• C)a $4 billion upshift in the consumption schedule.
• D)a $12 billion downshift in the consumption schedule.

---

Definitions:

Inverse Function

A function that reverses the operation of a given function, such that the composition of the two yields the original input.

Function

A framework involving a set of inputs and a roster of potential outputs, with the stipulation that each input is corresponded with only one output.

Composition

The combining of distinct parts or elements to form a whole, especially in mathematics where functions are combined.

Function

A mathematical relationship where each input has a single output, often expressed as f(x).