The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 81

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. Which of the following correctly describes the consumption function for this economy?

• A) C = 325 + 0.65)Y
• B) C = 350 + 0.68)YD
• C) C = 350 + 0.68)Y
• D) C = 1000 + 0.80)YD
• E) C = 1000 + 0.80)Y

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