If Transfer Payments and Autonomous Taxes Both Increase by Identical

question 63

Multiple Choice

If transfer payments and autonomous taxes both increase by identical amounts,

• A)equilibrium income will increase by the amount of the increase
• B)equilibrium income will increase by more than the increase
• C)equilibrium income will increase by less than the increase
• D)the change in equilibrium income will depend on the value of the MPC
• E)there will be no change in equilibrium income

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