Let Y = Real GDP and Y_d = Disposable Income

question 55

Multiple Choice

Let Y = real GDP and Y_d = disposable income.Suppose initially, Y = Y_d and the marginal propensity to consume (MPC)
Is 0.9.All components of aggregate expenditures except consumption are autonomous.Now suppose the government imposes an income tax rate of 20% on real GDP.What is the marginal propensity to consume following the imposition of an income tax?

• A)0.7
• B)0.72
• C)0.18
• D)1.1

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Definitions:

Cultural Vacuum

A situation or condition characterized by the absence or loss of cultural values, norms, or identities within a society.

Single-Cause Explanations

The attribution of a phenomenon or event to only one cause, ignoring the potential complexity and multiple factors involved.

Skepticism

An attitude of doubt or a disposition to incredulity either in general or toward a particular object.

Sociohistorical Context

The social and historical background influencing an event, situation, or cultural aspect.