In the Keynesian-Cross Model, If the MPC Equals 0

question 23

Multiple Choice

In the Keynesian-cross model, if the MPC equals 0.75, then a $3 billion decrease in taxes increases planned expenditures by _____ and increases the equilibrium level of income by _____.

• A)$3 billion; $9 billion
• B)$2.25 billion; $6.75 billion
• C)$2.25 billion; $2.25 billion
• D)$3 billion; $3 billion

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Definitions:

Action Of Negligence

A legal claim made against someone for harm caused by their failure to act as a reasonable person would under similar circumstances.

Six Elements

Essential components required for something to be complete or legally binding; the term contextually varies, such as in contracts or scientific compositions.

Propensity

A natural inclination or tendency towards a particular behavior or action.

Keeper

An individual responsible for the care or management of something, such as a property, animal, or institution.