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

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Definitions:

5′ Cap

A modified form of guanine nucleotide added to the 5′ end of eukaryotic mRNA, important for mRNA stability and initiation of translation.

Degradation

The process by which a compound is broken down or decomposed, often into simpler substances, sometimes leading to a loss of quality or function.

mRNA

Messenger RNA (mRNA) is a type of RNA that carries genetic information from DNA to the ribosome, where it directs the synthesis of proteins.

Deoxyribose

Pentose sugar lacking a hydroxyl (—OH) group on carbon-2′; a constituent of DNA.