Assume That Taxes Depend on Income

question 49

Multiple Choice

Assume that taxes depend on income. The MPC is 0.8 and t is 0.4. If government purchases increase by $100 billion, the equilibrium level of output will increase by

• A) $16.7 billion.
• B) $57.5 billion.
• C) $192.31 billion.
• D) $215.9 billion.

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Definitions:

Capitalist Development

The evolution or advancement of an economic system in which trade, industry, and the means of production are largely privately owned and operated for profit.

Heterogeneous Middle-Class

A diverse socio-economic group composed of individuals from various backgrounds with differing levels of income, education, and occupation.

Market Situation

Refers to the current conditions within a specific market, including demand, supply, pricing, and competition.

Technical Skill

The ability to accomplish tasks using specialized knowledge or expertise, particularly in relation to mechanical, informational, or scientific areas.