You Are Given the Following Information About the Canadian Economy

question 68

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

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Definitions:

Trialability

The degree to which a product or service can be experimented with on a limited basis before making a purchase decision.

Failure Rate

The proportion of a product, process, or service failing within a specific period under normal conditions.

Brainstorming Sessions

Group activities designed to generate creative ideas or solve problems through spontaneous participation.

Innovator

An individual or organization that introduces new ideas, products, or methods, often leading to changes in a market or industry.