Which of the Following Is a Correct Statement of the Impacts

question 111

Multiple Choice

Which of the following is a correct statement of the impacts of a lump-sum tax?

• A) Disposable income will increase by the amount of the tax and consumption at each level of GDP will decline by the amount of the tax multiplied by the MPC.
• B) Disposable income will decline by the amount of the tax and consumption at each level of GDP will decline by the amount of the tax multiplied by the multiplier.
• C) Disposable income will decline by the amount of the tax and consumption at each level of GDP will also decline by the amount of the tax.
• D) Disposable income will decline by the amount of the tax and consumption at each level of GDP will decline by the amount of the tax multiplied by the MPC.

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