If Net Taxes Were Lowered from $5,000 to $1,000,the Marginal

question 25

Multiple Choice

If net taxes were lowered from $5,000 to $1,000,the marginal propensity to consume is 0.75,and autonomous consumption spending is $10,000,by how much would consumption increase?

• A) $3,000
• B) $1,250
• C) $7,500
• D) $3,750
• E) $750

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Definitions:

Residual Income

The amount of income that remains after all personal debts and expenses have been paid.

Minimum Acceptable

The lowest level or standard that is satisfactory or allowable.

Income From Operations

Represents the profit from a company's core business operations, excluding deductions of interest and taxes.

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the profitability of a company.