(Advanced Analysis)Answer the Question on the Basis of the Following

question 133

Multiple Choice

(Advanced analysis) Answer the question on the basis of the following before-tax consumption schedule for an economy: $\begin{array}{l}\text { Gross Domestic }\\\begin{array} { c c } \underline{\text { Product (GDP) } } & \underline{\text { Consumption (C) } } \\ \$ 100 & \$ 140 \\200 & 200 \\300 & 260 \\400 & 320 \\500 & 380\end{array}\end{array}$ Refer to the data.The 10 percent proportional tax on income would cause:

• A) both consumption and saving to increase by larger and larger absolute amounts as GDP rises.
• B) both consumption and saving to increase by smaller and smaller absolute amounts as GDP rises.
• C) consumption to decrease by larger amounts and saving to decrease by smaller amounts as GDP rises.
• D) no change in the amounts consumed and saved at each level of GDP.

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Definitions:

Market Demands

The total amount of a product or service that consumers are willing and able to purchase at a given price.

Strength Relationship

The degree to which two variables are related or associated with each other, often used in the context of correlation analysis.

Forecasting Time Horizons

The periods into which future predictions or plans for business, economic, or other activities are divided, ranging from short-term to long-term.

Forecast Average

The mean value of predicted outcomes over a specified future period, often used in demand planning and inventory management.