Assume That Taxes Depend on Income

question 85

Multiple Choice

Assume that taxes depend on income. The MPC is 0.8 and t is 0.5. If government purchases increase by $100 billion, the equilibrium level of output will increase by

• A) $57.5 billion.
• B) $167 billion.
• C) $192.31 billion.
• D) $215.9 billion.

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Definitions:

Medical Benefits

Health care services and products provided to individuals, usually through insurance plans, to cover or offset health care costs.

Consolidated Omnibus Budget Reconciliation Act

A federal law in the United States that provides for continued health insurance coverage for individuals after employment termination.

Employee Income Security Act

A federal law designed to protect employees' retirement incomes and provide regulations for health and pension plans in the private industry.

Medical Benefits

The health-related services and coverage provided by insurance policies or social welfare programs.