**Question**Assume that MPC = 0.9 and t = 0.2. The tax multiplier is about:- -3.2- -2.5- -9- not enough info is given- -10**Explanation**This multiple-choice question asks you to calculate the tax multiplier given the marginal propensity to consume (MPC) and the tax rate (t). The tax multiplier can be calculated using the formula:\[ \text{Tax Multiplier} = \frac{-MPC}{1 - MPC \cdot (1-t)} \]By substituting the given values into the formula, we can determine which of the options is correct.

Tax multiplier refers to the proportionate value according to which a change in taxes will change…

Answered: Assume that MPC=0.9 and t=.2. The tax…

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Assume that MPC=0.9 and t=.2. The tax multiplier is about -3.2 O -2.5 -9 not enough info is given. O -10

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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