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

question 257

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, we can conclude that
The tax

• A) enhances the economy's built-in stability.
• B) reduces the economy's built-in stability.
• C) neither increases nor decreases built-in stability.
• D) increases the MPC and therefore increases the size of the multiplier.

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Definitions:

Microclimates

Small, localized areas within a larger climate zone that exhibit unique weather patterns and conditions.

Subsistence Farming

A type of agriculture where farmers grow food primarily for consumption by themselves and their families, with little surplus for trade.

Cultivation Practices

Various agricultural methods and techniques used to increase the growth and yield of plants, including crop rotation, irrigation, fertilization, and pest control strategies.

Pathogens

Microorganisms, such as bacteria, viruses, and fungi, that can cause disease in their hosts.