When the consumption function is expressed as C = 200 + .75(1- t)y where t =0.2, then an increase in income y by 100 will result in an increase in tax collection by:

Name: When the consumption function is expressed as C = 200 + .75(1- t)y where t =0.2, then an increase in income y by 100 will result in an increase in tax collection by:
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Question

Quizplus · Accepted Answer

The tax rate t is 0.2, so an increase in income y by 100 will result in an increase in tax collection by 0.2 * 100 = 20.

When the Consumption Function Is Expressed as C = 200