The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 20

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) = 0.80
∙ net tax rate (t) = 0.15
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars. FIGURE 22-3
-Refer to Figure 22-3.What is total autonomous expenditure?

• A)$300
• B)$325
• C)$650
• D)$1000
• E)$1975

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the proportion of a company's assets that are financed by stockholders' equity.

Dividend Yield

The ratio of a company's annual dividend payments to its share price, reflecting the earning potential from dividends for investors.

Receivable Turnover

A financial metric that measures the efficiency of a company in extending credit and collecting debts, calculated as sales divided by the average accounts receivable.

Inventory Turnover

An indicator of the number of times a firm's inventory turnover occurs during a certain period, demonstrating the effectiveness of its inventory control practices.