Use the Information Below to Answer the Following Questions

question 49

Multiple Choice

Use the information below to answer the following questions.
Fact 11.5.2
An economy has a consumption function of C = 15 + 0.7Y , investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2Y.
-Refer to Fact 11.5.2.What is the equation for the aggregate expenditure curve for this economy?

• A)AE = 55 + 0.9Y
• B)AE = 55 + 0.5Y
• C)AE = 35 + 0.5Y
• D)AE = 55 + 0.7Y
• E)AE = 45 - 0.5Y

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Definitions:

Market Factors

Elements that influence the trading of goods and services, such as supply and demand, price, and competition.

Derivative Financial Instrument

A financial contract whose value is derived from the performance of assets, interest rates, currency exchange rates, or indices.

Forward Exchange Contract

A financial agreement to exchange a specified amount of one currency for another currency at a future date and at a predetermined exchange rate.

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, often used as a financial instrument for hedging or speculation.