Assume Autonomous Net Taxes Rise by $500, and the Marginal

question 142

Multiple Choice

Assume autonomous net taxes rise by $500, and the marginal propensity to consume equals 0.75.Net exports, planned investment, taxes, and government purchases are autonomous and remain fixed.As a result, how will equilibrium real GDP demanded change?  

• A) It will rise by $500. 
• B) It will fall by $500. 
• C) It will rise by $1,500. 
• D) It will fall by $1,500.

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Definitions:

Cost of Goods Available

The total cost of inventory that is available for sale at the beginning of a period, including purchases made during that period.

Schedule of Cost

A detailed list showing the various components contributing to the total cost of manufacturing a product or providing a service.

Underapplied Manufacturing Overhead

The situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company.