Figure 13-5 -Refer to Figure 13-5. Let Y = Real GDP, AE

question 82

Multiple Choice

Figure 13-5
-Refer to Figure 13-5. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Consider a simple economy where AE = C + I_P, I_P is autonomous
Jand the consumption function is given by C = $1,000 billion + 0.75Y. What is the value of planned investment when real GDP is $6,000 billion?

• A) $3,000 billion
• B) $1,500 billion
• C) $1,000 billion
• D) zero

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Definitions:

Face Value

The original value of a financial instrument as stated on the instrument itself, without accounting for interest or market value fluctuations.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Compounded Monthly

An approach to interest calculation conducted every month, including both the initially loaned or deposited sum and the cumulatively gained interest from former periods.

Compound Increase

The growth of an amount where the increase over time accumulates on itself because the base amount changes due to additions made in previous periods.