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

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Definitions:

Spontaneous Recovery

The reappearance of a previously extinguished conditioned response after a period of no exposure to the conditioned stimulus.

Sexually Arousing

Refers to stimuli or aspects that induce sexual excitement or desire in an individual.

Appropriate US

An unconditioned stimulus that naturally induces an unconditioned response without the need for prior learning or conditioning.

Geometric Figure

A shape or form consisting of lines and angles, defined in geometry.