Question: If the calculations for MPC is below, why/how is the bolded portions removed, and where does Y go? Marginal Propensity to Consume (MPC): C=150+0.8(YT) =150+0.8((50+))

If the calculations for MPC is below, why/how is the bolded portions removed, and where does Y go? Marginal Propensity to Consume (MPC): C=150+0.8(YT) =150+0.8((50+)) C=150+0.8(Y(50+tY)) C=150+0.8(Y500.2875Y) MPC=0.8(10.2875)

MPC=0.57

The below is the initial information from the problem:

Consider a small open economy described by the following equations: Y = C + I + G + X - M C = 150 + 0.8(Y-T) I = 300 G = 150 X = 70 M = 0.2Y T = 50 + tY where Y is GDP, C is consumption, I is investment, G is government expenditures, X is exports, M is imports, T is taxes, and t is the tax rate on income. If the economy were at its natural level of output (i.e., full employment), GDP would be 1000.

If t = 0.2875 or 28.75 %

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