Refer to the data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, we can conclude that the tax:

Answer the question on the basis of the following before-tax consumption schedule for a closed economy:

A.  enhances the economy’s built-in stability.
B.  reduces the economy’s built-in stability.
C.  neither increases nor decreases built-in stability.
D.  increases the MPC and therefore increases the size of the multiplier.

ANSWER:

C.  neither increases nor decreases built-in stability.