Which of the Following Changes in Taxes Would Lead to the Smallest

question 67

Multiple Choice

Which of the following changes in taxes would lead to the smallest increase in consumption?

• A)​a $20,000 decrease in taxes, if MPC equals 0.5
• B)​a $12,000 decrease in taxes, if MPC equals 0.75
• C)​a $15,000 decrease in taxes, if MPC equals 0.6
• D)​a $30,000 decrease in taxes, if MPC equals 0.25

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Definitions:

Earn

Earn refers to receiving money in exchange for work or services rendered, or through investment returns.

Interest Rate

The percentage of the principal amount charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage rate (APR).

Equivalent

Equal in value, amount, function, meaning, etc., to something else.

Preceding January

The January that occurred immediately before the current date or specified event.