The data below is the consumption schedule in an economy. All figures are in billions of dollars. Refer to the above table. If a government sector is introduced and a lump-sum tax of $30 billion is imposed at all levels of GDP, then the consumption column in the table becomes:
A) $420, 460, 500, 540, 580
B) $426, 466, 506, 546, 586
C) $430, 470, 510, 550, 590
D) $432, 472, 512, 552, 592

Question

The data below is the consumption schedule in an economy. All figures are in billions of dollars.  Refer to the above table. If a government sector is introduced and a lump-sum tax of $30 billion is imposed at all levels of GDP, then the consumption column in the table becomes:
A) $420, 460, 500, 540, 580 
B) $426, 466, 506, 546, 586 
C) $430, 470, 510, 550, 590 
D) $432, 472, 512, 552, 592

Quizplus · Accepted Answer

To find the new consumption values after the imposition of a lump-sum tax of $30 billion at all levels of GDP, we need to subtract $30 billion from each consumption value in the original table. Therefore, the new consumption values become:
$426, $466, $506, $546, $586. 
So, the best choice is B.

The Data Below Is the Consumption Schedule in an Economy