Refer to the data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the marginal propensity to consume is:
Answer the question on the basis of the following before-tax consumption schedule for a closed economy:
A. .8 before taxes and .6 after taxes.
B. .8 both before and after taxes.
C. .6 before taxes and .8 after taxes.
D. .8 before taxes and .4 after taxes.
B. .8 both before and after taxes.
You might also like to view...
If the geography hypothesis holds, then:
A) poorer countries are permanently disadvantaged. B) living standards in poorer countries can be substantially improved. C) poorer countries are likely to catch up with richer countries very fast. D) cultural beliefs can be considered to be an important source of economic prosperity.
The tools of monetary policy:
A. are limited in number and never change. B. continue to evolve as the economy changes. C. are all equally effective since they all do basically the same thing. D. have been used in the same basic ways for a hundred years.