Assume Autonomous Net Taxes Fall by $300, and the MPC

question 2

Multiple Choice

Assume autonomous net taxes fall by $300, and the MPC equals 2/3.Net exports, planned investment, taxes, and government purchases are autonomous and remain fixed.As a result, what will be the change in equilibrium real GDP demanded?  

• A) It will fall by $300. 
• B) It will rise by $300. 
• C) It will fall by $600. 
• D) It will rise by $600.

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Definitions:

U.S. GAAP

United States Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.

Investing Activities

Transactions involving the acquisition or disposal of non-current assets, such as property, plant, and equipment, included in a company’s cash flow statement.

Statement of Cash Flows

A financial document that provides detailed information about a company's cash inflows and outflows over a specific period.

Direct Method

A approach used in cash flow statement preparation that lists all major operating cash receipts and payments for the period, directly showing sources and uses of cash.