Suppose Autonomous Net Taxes Decline by $40 Billion and the MPC

question 20

Multiple Choice

Suppose autonomous net taxes decline by $40 billion and the MPC equals 0.75.What effect will this have on equilibrium real GDP demanded?  

• A) It will decline by $120 billion. 
• B) It will increase by $120 billion. 
• C) It will decline by $160 billion. 
• D) It will increase by $160 billion.