If the MPC equals 0.80,a $200 billion tax decrease will increase consumption in the first round by

Name: If the MPC equals 0.80,a $200 billion tax decrease will increase consumption in the first round by
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The formula for calculating the initial increase in consumption due to a tax cut is: MPC x tax cut. In this case, MPC is 0.80 and the tax cut is $200 billion. Therefore, the initial increase in consumption would be 0.80 x $200 billion = $160 billion.

If the MPC Equals 0