The Multiplier That Should Be Applied to a Change in Taxes

question 100

Multiple Choice

The multiplier that should be applied to a change in taxes is:

• A) -(1/(1 - MPC) - 1).
• B) 1/(1 - MPC).
• C) -1/MPC.
• D) -1(MPC - 1).

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Definitions:

Reticular Activating System

A network of neurons located in the brainstem that plays a key role in regulating wakefulness, alertness, and transitions between sleep and wakefulness.

Hypothalamus

A subcortical structure that plays a vital role in controlling many motivated behaviors, like eating, drinking, and sexual activity.

Prefrontal Cortex

A region of the brain associated with decision making, personality expression, cognitive planning, and moderating social behavior.

Circadian Rhythm

The natural, internal process that regulates the sleep-wake cycle and repeats roughly every 24 hours.