The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 16

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) = 0.80
• net tax rate (t) = 0.15
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars. FIGURE 22-3
Refer to Figure 22-3.Which of the following equations describes the aggregate expenditure function for this economy?

• A)AE = 1000 + (0.68)Y
• B)AE = 1000 + (0.80)
• C)AE = 1000 + (0.80)Y + 0.15 Y_D
• D)AE = 1975 + (0.68)Y
• E)AE = 1975 + (0.65)Y

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Definitions:

Unemployment

The situation of being without a job despite searching for work, reflecting the inability of an economy to generate enough jobs for its workforce.

Debt Collections

The process of pursuing payments of debts owed by individuals or businesses, typically conducted by collection agencies or creditors.

John Marshall

An influential United States Supreme Court Chief Justice from 1801 to 1835, known for shaping American constitutional law and judicial authority.