The table below indicates the status of the US economy in 2023. The existing Marginal Propensity to Consume (MPC) is .65 and the existing tax
The table below indicates the status of the US economy in 2023. The existing Marginal Propensity to Consume (MPC) is .65 and the existing tax rate is 15%. 2023 in Trillions of $ 2023 in Trillions of $ 24.0 Income before Taxes 0.2 Tax Rate 10.0 Change in Taxes to People 19.2 Disposable Income 0.65 Marginal Propensity to C 12.5 Total Consumption Spending 3.0 Investment Spending 10.0 Change in government Spending 4.8 Total Government Spending 20.3 GDP 1. If the MPC is really .60 (60%), recalculate the state of the economy. 2. Is GDP larger or smaller? 3. Define MPC. 4. What does it mean to have MPC move from .65 to .60? 5. Is this a more desirable situation? Why or why not
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