The Amount by Which Consumption Increases When After-Tax Income Increases

question 28

Multiple Choice

The amount by which consumption increases when after-tax income increases by $1 is called the:

• A) marginal propensity to consume.
• B) marginal consumption revenue.
• C) variable propensity to consume.
• D) consumption multiplier effect.

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Definitions:

Real GDP

GDP, corrected for inflation, to yield a clearer picture of the economic growth and the actual scale of the economy.

Tax Cuts

Reductions in the amount of taxes that individuals or corporations are required to pay to the government.

Government's Plan

A systematic arrangement of actions or strategies designed by a government to achieve specific outcomes or objectives.

Softening Economy

A term used to describe an economic state where growth is slowing down, signaling a potential downturn or lesser economic activity.