If the MPC Is 0

question 55

Multiple Choice

If the MPC is 0.75,a decrease in net taxes of $100 billion will increase the equilibrium level of real GDP by

• A)$75 billion
• B)$100 billion
• C)$300 billion
• D)$400 billion
• E)$500 billion

---

Definitions:

Tariff Exemption

A waiver of customs duties typically levied on imported goods, often granted to promote trade or address specific economic needs.

Cereals

Grasses cultivated for the edible components of their grain, like wheat, maize, rice, and oats, which are a staple food in many cultures.

Protectionism

A call for tariffs and favourable treatments to protect domestic firms from foreign competition.

Foreign Competition

The presence of competitors from other countries in a domestic market, highlighting the global nature of the market and challenges for local firms.