The Introduction of a $100 Autonomous Net Tax in an Economy

question 2

Multiple Choice

The introduction of a $100 autonomous net tax in an economy with an MPC equal to 0.7 will,at each level of real GDP,

• A)increase consumption by $100
• B)decrease consumption by $100
• C)increase consumption by $70
• D)decrease consumption by $70
• E)decrease consumption by $30

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Definitions:

Conductive Gel

A substance used to improve electrical conductivity between two surfaces, often used in medical and electronic applications.

Electrical Activity

The natural phenomena of electric charges movement, observed especially in biological contexts like brain and heart function.

EEG

A test that detects electrical activity in the brain using small, metal discs attached to the scalp.

Brain

The organ located within the skull that is the center of the nervous system in all vertebrates and most invertebrates, responsible for coordinating sensation, intellectual and nervous activity.