Consider a Simple Macro Model with a Constant Price Level

question 116

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

• A)120.0.
• B)420.0.
• C)600.0.
• D)828.8.
• E)1120.0.

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Definitions:

Producer Surplus

The disparity between the price suppliers are ready to settle for when selling a good or service and the greater amount they end up receiving.

Cost of Production

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead costs.

Producer Surplus

The variance between the lowest price producers agree to sell a good or service for and the price they actually get.

Demand Curve

An illustrative chart that maps out the link between a good or service's price and the amount of it people are willing to buy during a certain period.