The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 98

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.What is the equilibrium national income in this economy?

• A)$187.50
• B)$294
• C)$333.34
• D)$625
• E)$1666.67

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Definitions:

Foreign Market

Markets outside the domestic boundaries of a company where it conducts or aims to conduct business.

Meganational Companies

Large corporations that operate in multiple countries around the world, often exerting significant economic and political influence.

Local Human Capital

The accumulated knowledge, skills, and experience possessed by the workforce within a specific locale, region, or community.

Subsidiary Human Capital

The skills, knowledge, and experience possessed by employees of a subsidiary, which contribute to its value and performance.