The Accompanying Table Is the Before-Tax Consumption Schedule for a

question 187

Multiple Choice

$$\begin{array} { | c | c | } \hline \text { Gross Domestic Product (GDP) } & \text { Consumption (C) } \\\hline \$ 0 & \$ 40 \\\hline 100 & 120 \\\hline 200 & 200 \\\hline 300 & 280 \\\hline 400 & 360 \\\hline\end{array}$$ The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the marginal
Propensity to consume is

• A) 0.8 before taxes and 0.6 after taxes.
• B) 0.8 both before and after taxes.
• C) 0.6 before taxes and 0.8 after taxes.
• D) 0.8 before taxes and 0.4 after taxes.

---

Definitions:

Ranking Procedure

A ranking procedure is a statistical method used to assign ranks to various items or entities based on certain attributes or measurements.

Analysis of Variance (ANOVA)

A statistical method used to test the difference between two or more means by analyzing variances.

T-test

A statistical test used to compare the mean of a sample to a known value, or the means of two samples, to assess if the differences are statistically significant.

Regression Analysis

The statistical process for estimating the relationships among variables, often used to predict a dependent variable from one or more independent variables.