If the Marginal Propensity to Consume (MPC) Is 0

question 56

Multiple Choice

If the marginal propensity to consume (MPC) is 0.75 and if policy makers wish  to increase real GDP by $300 million to fight a recession, then by how much  would taxes have to change?

• A)  -$30 million
• B)  -$50 million
• C) -100 million
• D) -300 million

---

Definitions:

Psychomotor Retardation

A slowing down of thought and a reduction of physical movements in an individual, often observed in major depressive disorders.

Major Depressive Disorder

A mental health condition marked by persistent feelings of sadness, loss of interest, and a lack of pleasure in life.

Major Depressive Disorder

A psychiatric disorder where there's a steady presence of a downcast mood or a diminished interest in familiar activities, severely affecting one's day-to-day existence.

Imipramine

A tricyclic antidepressant used to treat major depression and sometimes neuropathic pain.