If Net Taxes Increase by $100 Billion and the Marginal

question 109

Multiple Choice

If net taxes increase by $100 billion and the marginal propensity to consume is 0.6,by how much will GDP change?

• A) -$250 billion
• B) $150 billion
• C) $250 billion
• D) -$100 billion
• E) -$150 billion

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Definitions:

Shareholders' Wealth

Refers to the overall value of the shares an investor holds in a company, which increases as the company's value goes up.

Government Policies

Strategies and measures adopted by a government to regulate, guide, and control activities within its jurisdiction, affecting economic, social, and administrative spheres.

Managers' Actions

Decisions and activities undertaken by the management of a company to achieve its objectives.

Cash Bidding Price

The price a buyer offers to pay in cash for a specific asset during a competitive bidding process.