The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 33

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) = 0.75
· net tax rate t) = 0.20
· no foreign trade
· fixed price level
· all expenditure and income figures are in billions of dollars.
FIGURE 22-2
-Refer to Figure 22-2. Which of the following correctly describes the consumption function for this economy?

• A) C = 0.6)YD
• B) Y = 250 + 0.75)YD
• C) C = 75 + 0.75)YD
• D) Y = 250 + 0.75)Y
• E) C = 250 + 0.6)Y

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Definitions:

Construction

The process of building or assembling infrastructure, buildings, or other substantial physical structures.

Overhaul

A comprehensive process of inspection and repair to ensure an equipment or system operates efficiently.

Double-declining-balance Method

A method of depreciation that accelerates the depreciation of an asset by applying a fixed rate to its declining book value.

Straight-line Method

A depreciation method that allocates the cost of an asset evenly over its useful life, resulting in a constant annual depreciation expense.