An Increase in Taxes Will Have a Greater Effect on the Equilibrium

question 3

Multiple Choice

An increase in taxes will have a greater effect on the equilibrium GDP

• A)if the tax revenues are redistributed through transfer payments.
• B)the larger the MPS.
• C)the smaller the MPC.
• D)the larger the MPC.

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Definitions:

Actor/observer Bias

A cognitive bias that explains differences in how people attribute causes to their own versus others' behavior; typically attributing one's own actions to situational factors and others' actions to personal characteristics.

Internal Attributions

Explanations for people's behaviors based on their internal characteristics, such as personality traits, motives, or attitudes, as opposed to the influence of external circumstances.

External Attributions

The process of assigning the cause of a behavior or event to factors outside the individual, such as situational or environmental influences.

Causal Explanation

An assertion or theory that attempts to explain the cause of a particular event or phenomenon, establishing one factor as leading to the effect of another.