Within the simple Keynesian model with lump-sum taxes, if the MPC (b) were 0.75 then if taxes rise by 200 then income
a. rises by 800.
b. falls by 200.
c. falls by 800.
d. rises by 200.
e. falls by 800.
Question 2
According to Figure 3.2, the marginal product of labor
a. falls short of the real wage at point
b. b. is higher at point a than at point e.
c. equals the real wage at point c.
d. All of the above
e. None of the above.
