If Congress adjusted the U.S. tax system so that the MPC was reduced, the
A) economy would become more inﬂation prone.
B) economy would become less stable.
C) stability of the economy would be unaffected.
D) economy would become more stable.

Question

Quizplus · Accepted Answer

If Congress adjusted the U.S. tax system so that the MPC (marginal propensity to consume) was reduced, it means that people would be saving more of their income and spending less. This could lead to a decrease in consumer demand and a slowing down of economic growth. However, it could also lead to lower inflationary pressures and a more stable economy in the long run. Therefore, the most likely result would be that the economy would become more stable.

If Congress Adjusted the U