The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 105

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.What is the equilibrium national income in this economy?

• A)$1470.59
• B)$3125.00
• C)$1975.00
• D)$5000.00
• E)$6171.87

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