If the Government Lowers Taxes by $400 Billion, and the MPC

question 160

Multiple Choice

If the government lowers taxes by $400 billion, and the MPC is −0.75, the change in GDP will be:

• A) $400 billion.
• B) $1,600 billion.
• C) $300 billion.
• D) $1,200 billion.

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Definitions:

Mortgage Interest Deductions

A tax deduction that homeowners can take for the interest paid on a mortgage for their residence, which reduces taxable income.

High-rise Public Housing

Residential buildings built and managed by government authorities to provide housing to low-income families, notable for their vertical structure.

Social Policies

Plans and actions designed by an organization or government to address social issues and improve the well-being of its citizens.

Working Poor

Individuals and families who have jobs but earn wages too low to rise above the poverty line, facing financial instability despite employment.