If Autonomous Net Taxes Increase by $200 Billion and the MPC

question 14

Multiple Choice

If autonomous net taxes increase by $200 billion and the MPC equals 0.75,equilibrium income will

• A)decrease by $200 billion
• B)decrease by $150 billion
• C)decrease by $600 billion
• D)decrease by $267 billion
• E)decrease,but it is impossible to calculate the exact amount of the change

Appreciate the role of health insurance and employment programs in providing security and assistance to employees.

Analyze the effectiveness and challenges of implementing safety standards and wellness programs in diverse work environments.

Understand the concept of efficiency in an economy and how it is defined.

Recognize the role of government intervention in correcting market failures and achieving efficiency.

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Definitions:

Option

A contract that gives its holder the right to buy or sell an asset at some predetermined price within a specified period of time.

Sweetener

A feature that makes a security more attractive to some investors, thereby inducing them to accept a lower current yield. Convertible features and warrants are examples of sweeteners.

Bankers' Acceptance

A short-term debt instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Securitization

The process whereby financial instruments that were previously thinly traded are converted to a form that creates greater liquidity. Securitization also applies to the situation where specific assets are pledged as collateral for securities, and hence asset-backed securities are created. One example of the former is junk bonds; an example of the latter is mortgage-backed securities.