Assume that taxes depend on income. The MPC is 0.5 and t is 0.2. If government spending increases by $10 billion, the equilibrium level of output will increase by
A) $16.7 billion.
B) $25 billion.
C) $50 billion.
D) $100 billion.
Correct Answer:
Verified
Q329: The value of the balanced-budget multiplier is
A)
Q330: Assume that taxes depend on income. The
Q331: The balanced-budget multiplier works whenever the government
Q332: The tax multiplier is a negative multiplier.
Q333: As the MPC decreases, the government spending
Q335: The balanced-budget multiplier
A) equals 0.
B) is greater
Q336: If the MPC is 0.8, the tax
Q337: Assume that taxes depend on income. The
Q338: If the MPS is 0.4, the government
Q339: If taxes depend on income and the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents