Multiple Choice
Assume the consumption function is of the form C = 200 + (0.75) YD and the income tax rate is t = 0.2.What would be the effect of an increase in government transfers of 200 ?
A) an increase in income of 800
B) an increase in income of 500
C) an increase in income of 375
D) an increase in income of 300
E) an increase in income of 125
Correct Answer:
Verified
Correct Answer:
Verified
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