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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Definitions:

Self-Efficacy

Someone's assurance in their potential to perform tasks essential for reaching desired achievements.

Internal Personal Factor

An individual's intrinsic traits or characteristics, such as beliefs, values, attitude, and personality, that influence behavior.

Spotlight Effect

The perspective that people are overly concerned with observing one's external behavior and appearance, more so than in reality.

Participants

Individuals who take part or are involved in an activity or event, often referred to in research studies.