A Tax Cut of $8 Billion with an MPC of 0.90

question 31

Multiple Choice

A tax cut of $8 billion with an MPC of 0.90 will cause a cumulative change in spending equal to:

• A) An increase of $720 million.
• B) An increase of $72 billion.
• C) An increase of $80 billion.
• D) A decrease of $720 billion.

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Definitions:

Urinates

The act of discharging urine from the body.

Token Economy

A form of behavior modification designed to increase desirable behavior and decrease undesirable behavior with the use of tokens.

Chips

Thin slices of vegetables, fruits, or other foods, fried or baked until crisp, often consumed as a snack.

Trade

The exchange of goods or services between entities or individuals.