The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 85

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 equations describes the aggregate expenditure function for this economy?

• A) AE = 1000 + 0.68)Y
• B) AE = 1000 + 0.80)YD
• C) AE = 1000 +0.80)Y + 0.15 YD
• D) AE = 1975 + 0.68)Y
• E) AE = 1975 +0.65)Y

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Definitions:

Coercive Power

A form of authority that relies on the threat of force or punishment to compel obedience.

Reward Power

is a form of influence where an individual has control over the distribution of rewards, motivating others to follow directions or achieve goals.

Referent Power

The influence one has over others because they respect, admire, or like the individual.

Organizational Learning

The process by which organizations acquire, improve, and manage knowledge to better adapt and succeed.