According to the Keynesian-Cross Analysis, If MPC Stands for Marginal $\Delta$

question 66

Multiple Choice

According to the Keynesian-cross analysis, if MPC stands for marginal propensity to consume, then a rise in taxes of $\Delta$ T will:

• A) decrease equilibrium income by \(\Delta\)T.
• B) decrease equilibrium income by \(\Delta\)T/(1 - MPC).
• C) decrease equilibrium income by (\(\Delta\)T)(MPC)/(1 - MPC).
• D) not affect equilibrium income at all.

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