A tax-cut will have a greater effect on equilibrium GDP if the: A. Marginal propensity to consume is smaller B. Marginal propensity to save is smaller C. Marginal propensity to save is larger D. Average propensity to save is larger

Respuesta :

Answer:

The correct answer is (B)

Explanation:

A Tax-cut has many benefits on the overall economic performance of a country. When consumers see a tax-cut, it increases their demand for goods so  a tax-cut is beneficial to the equilibrium GDP if the marginal propensity to save decrease due to a tax-cut. If the marginal propensity of save decreases it ultimately benefits the production sector of a country. More production means a better gross domestic product.