Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 154

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 induced expenditures?

• A) $500
• B) $800
• C) $1,100
• D) $1,900

---

Definitions:

Defense Mechanism

Psychological strategies brought into play by individuals, groups, or even nations to cope with realities and to maintain self-image.

Intellectualization

A defense mechanism where reasoning is used to block confrontation with an unconscious conflict and its associated emotional stress, where thinking is used to avoid feeling.

Toilet Training

The process of teaching a young child to control their bladder and bowel movements and to use the toilet for elimination.

Anal Stage

The Anal Stage is the second stage in Freud's psychosexual development theory, occurring from about 18 months to 3 years of age, where children find pleasure in controlling bladder and bowel movements.