-Refer to the above data.If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy,the marginal propensity to consume is:

Question

-Refer to the above data.If a lump-sum tax (the same tax amount at each level of GDP)of $40 is imposed in this economy,the marginal propensity to consume is:

Quizplus · Accepted Answer

A lump-sum tax does not affect the marginal propensity to consume (MPC) because it is a fixed amount and does not change with income levels. Therefore, the MPC remains the same before and after the tax.

-Refer to the Above Data