Assume That the Consumption Function Is Given by C =

question 158

Multiple Choice

Assume that the consumption function is given by C = 150 + 0.85(Y - T) , the tax function is given by T = t₀ + t₁Y, and Y is 5,000. If t₁ decreases from 0.3 to 0.2, then consumption increases by:

• A)85.
• B)425.
• C)500.
• D)525.

---

Definitions:

Incidental

Referring to something that occurs as a minor or secondary consequence of something else.

Unintentional Benefit

A positive outcome or advantage that occurs without the intent to produce such an effect, often an incidental result of an action.

Directly Benefit

To receive an immediate, positive impact from an action or decision, without intermediary steps.

Third Party

An entity or individual that is not directly involved in an agreement or transaction but may be affected by its outcome.