Using the Keynesian Cross, If Autonomous Consumption Is $200 and Investment

question 46

Multiple Choice

Using the Keynesian cross, if autonomous consumption is $200 and investment is $400, and the marginal propensity to consume is 0.75, while government spending, net exports and taxes are zero, then equilibrium output is

• A) $450.
• B) $600.
• C) $1,050.
• D) none of the above.

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Definitions:

Mortgage Loans

Loans secured by real property through the use of a mortgage note, typically used to purchase real estate.

Moderate Incomes

Earnings that are neither too high nor too low, often associated with the middle class in a given society.

Interest Rates

The cost of borrowing money or the return for investing, expressed as a percentage of the principal, influencing consumer and business spending.

Interest-sensitive Goods

Products or services whose demand is heavily influenced by changes in interest rates, such as housing and automobiles.