If the tax function is T = t0 + t1Y where t1 equals 1/3,and if the marginal propensity to consume out of disposable income is 3/4,then the change in GDP per unit change in t0 (ΔY/Δt0) will be
A) − 1.
B) + 1.
C) − 1.5.
D) − 2.
E) + 1.5.
Correct Answer:
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