Use the Following to Answer Questions

question 150

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Expenditures and Real GDP 1
-(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment. Suppose AE = C + I_P. I_P is autonomous and the consumption function is C = $1,000 billion + 0.5Y. If real GDP = $5,000 billion, what is the amount of aggregate expenditures?

• A) $4,500 billion
• B) $5,000 billion
• C) $5,500 billion
• D) $6,000 billion

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Definitions:

Opportunity Cost

The cost of a missed opportunity; the value of the best alternative forgone.

Direct Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based directly on the willingness to pay.

Arbitrage

The practice of buying and selling equivalent goods in different markets to take advantage of price differences for profit.

Low-value Group

A classification for items or entities considered to have lesser worth or importance, typically due to lower quality or usefulness.