You Are Given the Following Information About the Canadian Economy

question 20

Multiple Choice

You are given the following information about the Canadian economy.Autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion.The marginal propensity to consume is 0.7 and net taxes are $250 billion.Net taxes are assumed to be constant and not vary with income.Exports are $500 billion and imports are $450 billion.
The equation of the AE curve in billions of dollars is _______ .Equilibrium expenditure is _______ .

• A)AE = 0.7Y + 375; $536 billion
• B)AE = 0.7 + 375Y; $1,250 billion
• C)AE = 0.7Y + 300; $1,000 billion
• D)AE = 0.7Y + 375; $1,250 billion
• E)AE = 0.7Y + 1,275; $4,250 billion

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Definitions:

Required To Maintain

Obligatory actions or measures needed to keep a system, process, or asset in working order or to uphold a specific condition.

Manufacturer

A company or individual that produces finished goods from raw materials through the use of machinery and labor, involved in the industrial sector of the economy.

Direct Lease

A lease agreement where the lessee directly leases the asset from the owner or lessor without using a third party.

Lessors Firm

A company that leases assets or property to another party, known as the lessee, under a contractual agreement.