Let Investment Be Given by I = 500 - 1,200R

question 22

Multiple Choice

Let investment be given by I = 500 - 1,200R + 0.4Y, C = 200 + 0.75YD, the personal income tax rate equal 33 percent, and 0.8Y - 2,400 = M/P. If government spending equals 500 and the nominal money supply equals 100, which of the following represents the corresponding aggregate demand curve?

• A) Y = 2,000 - 0.833M/P.
• B) Y = 2,000 - 0.667M/P.
• C) Y = 0.833M/P - 2,000.
• D) Y = 0.833M/P + 2,000.
• E) Y = 0.667M/P - 2,000.

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Definitions:

Variable Manufacturing

Costs in manufacturing that change in proportion to the volume of production, such as materials and labor.

Materials Price Variance

The difference between the actual cost of materials used in production and the budgeted cost of materials, based on standard prices and actual quantities purchased.

Variable Manufacturing

Costs in manufacturing that vary directly with the level of production, such as raw materials and direct labor costs.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on a certain activity level.