Author Question: If consumption is defined as C = 2,000 + 0.8Y, then the marginal propensity to save is 0.8. ... (Read 43 times)

javeds · **on:** Jun 29, 2018

If consumption is defined as C = 2,000 + 0.8Y, then the marginal propensity to save is 0.8.

Indicate whether the statement is true or false

Question 2

If the tax multiplier is -1.5 and a 200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)

A) a 300 billion decrease in GDP
B) a 30 billion increase in GDP
C) a 300 billion increase in GDP
D) a 133.33 billion increase in GDP
E) a 133.33 billion decrease in GDP