If Autonomous Net Taxes Increase by $200 Billion and the MPC

question 14

Multiple Choice

If autonomous net taxes increase by $200 billion and the MPC equals 0.75,equilibrium income will

• A)decrease by $200 billion
• B)decrease by $150 billion
• C)decrease by $600 billion
• D)decrease by $267 billion
• E)decrease,but it is impossible to calculate the exact amount of the change

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Definitions:

Electric Power Company

A business entity that generates, transmits, and distributes electricity to consumers and businesses.

Total Profits

The total earnings of a business after subtracting all costs and expenses from the total revenue.

Single-Price Monopoly

A market structure where the monopolist charges all consumers the same price for its sole product.

Market Elasticity

The measure of how much the quantity demanded or supplied of a product changes in response to a change in price.