The following schedule contains data for a private closed economy.All figures are in billions.Use these data in answering the question. $\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$150\
180 & 180 \
220 & 210 \
260 & 240\
300 &270 \
\end{array}$ Refer to the data.If a lump-sum tax of $20 is imposed,the consumption schedule will become:
A)
$\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$150\
180 & 180 \
220 & 210 \
260 & 240\
300 &270 \
\end{array}$
B)
$\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$155\
180 & 185 \
220 & 215 \
260 & 245\
300 &275 \
\end{array}$
C)
$\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$135\
180 & 165 \
220 &195 \
260 & 255\
300 &255 \
\end{array}$
D)
$\begin{array}{l}
\underline{\text { GDP }}& \underline{C} \
\$140&\$130\
180 & 160 \
220 & 190 \
260 & 220\
300 &250 \
\end{array}$

Question

Quizplus · Accepted Answer

A lump-sum tax reduces disposable income by the amount of the tax. Therefore, consumption at each level of GDP will be reduced by $20.

The Following Schedule Contains Data for a Private Closed Economy GDP ‾C‾$140$150180180220210260240300270\begin{array}{l}\underline{\text { GDP }}& \underline{C} \\\$140&\$150\\180 & 180 \\220 & 210 \\260 & 240\\300 &270 \\\end{array} GDP ​$140180220260300​C​$150180210240270​

The Following Schedule Contains Data for a Private Closed Economy $\begin{array}{l}\underline{\text { GDP }}& \underline{C} \\\$140&\$150\\180 & 180 \\220 & 210 \\260 & 240\\300 &270 \\\end{array}$