If a Lump-Sum Tax of $40 Billion Is Imposed and the MPC

question 163

Multiple Choice

If a lump-sum tax of $40 billion is imposed and the MPC is 0.6, the saving schedule will shift

• A)downward by $24 billion.
• B)upward by $24 billion.
• C)downward by $16 billion.
• D)upward by $16 billion.

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.

Confirmation Biases

The habit of seeking out, understanding, preferring, and remembering information in a manner that reinforces one's already held beliefs or theories.

Self-Serving Bias

A cognitive bias that leads individuals to attribute their successes to internal factors and their failures to external factors, enhancing their self-esteem.

Recognition Heuristic

A decision-making process where familiarity with a subject or thing makes it more likely to be chosen over unfamiliar options.