Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T = – 30 + 0.25Y
An increase in the intercept of the tax function of 10 units (from – 30 to – 20) would cause equilibrium income in the simple Keynesian model to fall by a. -20 units.
b. 10 units.
c. 20 units.
d. 40 units.
C
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In the long run
A) fixed costs tend to be greater than variable costs. B) variable costs tend to be greater than fixed costs. C) all costs are fixed costs. D) all costs are variable costs.
For any given output level, a firm's long-run costs
a. are always greater than or equal to its short-run costs. b. are usually greater than or equal to its short-run costs except in the case of diminishing returns to scale. c. are always less than or equal to its short-run costs. d. are usually less than or equal to its short-run costs except in the case of diminishing returns to scale.