If the Government Wants to Increase Equilibrium by $100 Billion $\times$

question 30

Multiple Choice

If the government wants to increase equilibrium by $100 billion through a change in autonomous net taxes,it could __________ autonomous net taxes by __________.

• A)increase; $100 billion
• B)decrease; $100 billion
• C)decrease; $100 billion \(\times\) MPC/(1 - MPC)
• D)increase; $100 billion \(\times\) MPC/(1 - MPC)
• E)decrease; $100 billion \(\times\) (1 - MPC)/MPC

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Definitions:

Make or Buy Decision

A decision-making process where a business evaluates the cost benefits of manufacturing a product in-house versus purchasing it from an external supplier.

Fixed Overhead

Costs that do not vary with production volume, such as rent, salaries, and insurance, required to operate a business regardless of production levels.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Relevant Costs

Costs that are directly related to a specific management decision and that will change as a result of that decision.