In a Certain Economy, the Components of Planned Spending Are

question 102

Multiple Choice

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r
Ip = 200 - 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, what would be the impact on short-run equilibrium output of a one-percentage-point increase in the real interest rate, assuming the income-expenditure multiplier equals 5?

• A)Short-run equilibrium output would increase by 35 units.
• B)Short-run equilibrium output would decrease by 700 units.
• C)Short-run equilibrium output would decrease by 35 units.
• D)Short-run equilibrium output would decrease by 7 units.

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Definitions:

Heart Cycle

The sequence of events that occur in the heart during one heartbeat, encompassing both the contraction (systole) and relaxation (diastole) phases.

Relaxation

The act or process of becoming less tense, stressed, or anxious, often involving techniques or activities that promote this state.

Oximetry

A procedure for measuring the oxygen saturation of the blood.

-metry

A suffix denoting the process of measuring or the science of measurement, used in words like "geometry" or "biometry".