Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Now suppose a proportional tax with a 10 percent tax rate is imposed instead of the regressive tax.
Instructions: In part a, enter your answers as a whole number. In part b, round your answers to 1 decimal place.
a. Calculate the new consumption schedule.
\begin{tabular}{c|c|c|c|c|}
\hline GDP, Billions & \begin{tabular}{c}
Consumption \\
Before Tax, \\
Billions
\end{tabular} & Tax, Billions & \begin{tabular}{c}
Disposable \\
Income, Billions
\end{tabular} & \begin{tabular}{c}
Consumption After \\
Tax, Billions
\end{tabular} \\
\hline\( \$ 100 \) & \( \$ 120 \) & & & \\
\hline 200 & 200 & & & \\
\hline 300 & 280 & & & \\
\hline 400 & 360 & & & \\
\hline 500 & 440 & & & \\
\hline 600 & 520 & & & \\
\hline 700 & 600 & & & \\
\hline
\end{tabular}
b. Calculate the MPC and the multiplier.
\( \mathrm{MPC}= \) \( \square \)
Multiplier = \( \square \)
