If Autonomous Net Taxes Increase by $10 Trillion and the Marginal

question 105

Multiple Choice

If autonomous net taxes increase by $10 trillion and the marginal propensity to consume is 0.8,consumption initially will

• A)increase by $50 trillion
• B)decrease by $10 trillion
• C)decrease by $8 trillion
• D)increase by $10 trillion
• E)decrease by $50 trillion

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Definitions:

Supply

The total amount of a good or service available for purchase at any given price level within a specific market.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another.

Exchange Rate

The value of one currency expressed in terms of another currency, determining how much of one currency can be exchanged for another.