Consider the Simplest Macro Model with Demand-Determined Output

question 38

Multiple Choice

Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y -T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.The marginal propensity to spend on national income in this model is

• A)0.50.
• B)0.54.
• C)0.64.
• D)0.84.
• E)0.86.

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Definitions:

Accumulated Depreciation

The total depreciation that has been recorded for an asset over its useful life.

Gain On Sale

The profit earned from the sale of an asset above its book value.

GAAP

A set of widespread accounting rules and standards, referred to as Generally Accepted Accounting Principles, used for financial reporting.

Fair Value

The estimated market value of an asset or liability, reflecting the amount at which it could be bought or sold in a current transaction between willing parties.