In the Keynesian-Cross Analysis, If the Consumption Function Is Given

question 89

Multiple Choice

In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y - T) , and planned investment is 100, G is 100, and T is 100, then equilibrium Y is:

• A)350.
• B)400.
• C)600.
• D)750.

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Definitions:

Asset-specific Risk

Refers to the risk affecting an investment's value that is associated with the particular assets the investment owns, distinct from marketwide risks.

Specific Risk

The risk associated with a particular company or sector, which can be mitigated through diversification.

Market Risk Premium

Market Risk Premium is the additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Risk-free Rate of Return

The anticipated profit from a riskless investment, usually tied to government treasuries.