Assume That Taxes Depend on Income and the MPC Is

question 195

Multiple Choice

Assume that taxes depend on income and the MPC is 0.6 and t is 0.3. An increase in taxes of $10 billion will decrease equilibrium income by

• A) $10.3 billion.
• B) $17.2 billion.
• C) $20.0 billion.
• D) $22.4 billion.

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