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Suppose the marginal propensity to consume (MPC) is either 0.9,0.55, or 0.82 . a. For each value of the MPC, calculate the impact of a
Suppose the marginal propensity to consume (MPC) is either 0.9,0.55, or 0.82 . a. For each value of the MPC, calculate the impact of a one-dollar decrease in taxes on GDP. Instructions: Enter your responses rounded to one decimal place. b. For each value of the MPC, calculate the impact on GDP of a $250 million decrease in taxes. Instructions: Enter your responses rounded to one decimal place. c. Which of the following best describes the relationship between the MPC and the impact of a change in taxes on GDP. the larger the MPC, the larger the impact on GDP of a given change in taxes. the larger the MPC, the smaller the impact on GDP of a given change in taxes. the impact on GDP of a change in taxes does not depend on the size of the MPC. it is impossible to say unless we know the tax rate
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