Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 72

Multiple Choice

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. If the consumption function is
C = $500 + 0.8Y, planned investment = $200, government purchases = $300,
Net exports = $100, and real GDP = $1,000, what is the amount of autonomous expenditures?

• A) $500
• B) $1,000
• C) $1,100
• D) $1,900

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Definitions:

Hypothesis

An assumption that is tested through research and experimentation.

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The initial theory or assumption that is made at the beginning of a research or experimental process, proposing a potential outcome.

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The ability to change or adjust oneself or one's approach to meet different conditions or environments.

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