The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 96

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc) = 0.75
• net tax rate (t) = 0.20
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars. FIGURE 22-2
Refer to Figure 22-2.Which of the following correctly describes the consumption function for this economy?

• A)C = (0.6)Y_D
• B)Y = 250 + (0.75)Y_D
• C)C = 75 + (0.75)Y_D
• D)Y = 250 + (0.75)Y
• E)C = 250 + (0.6)Y

---

Definitions:

1910

Refers to the year which marked significant events globally such as the start of the Mexican Revolution and advancements in technology and society at the early 20th century.

Late Nineteenth Century

A period from 1870 to 1900 characterized by significant industrial, social, and political changes in many parts of the world.

Early Twentieth Centuries

The period from the start of the 1900s through the early 1930s, a time of significant global change and upheaval.

United States

A country in North America founded in 1776, comprised of 50 states, known for its vast size and diversity.