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:

Sample Variances

A measure of the spread or dispersion of a set of sample data points.

Test Statistic

A value calculated from sample data during a hypothesis test used to determine whether to reject the null hypothesis.

F-distribution

The F-distribution is a probability distribution that arises in the analysis of variances for comparing the variances of two or more samples.

F-distribution

A probability distribution that arises in the analysis of variances for comparing variances between samples.