The Introduction of a $100 Autonomous Net Tax in an Economy

question 2

Multiple Choice

The introduction of a $100 autonomous net tax in an economy with an MPC equal to 0.7 will,at each level of real GDP,

• A)increase consumption by $100
• B)decrease consumption by $100
• C)increase consumption by $70
• D)decrease consumption by $70
• E)decrease consumption by $30