The Figure Given Below Represents the Macroeconomic Equilibrium in the Aggregate

question 131

Multiple Choice

The figure given below represents the macroeconomic equilibrium in the aggregate income and aggregate expenditure framework. Assume that MPI is equal to zero.
Figure 10.4
In the figure:
C: Consumption
I₁ and I₂: Investment
G: Government Spending
X: Exports
-Refer to Figure 10.4. If autonomous government expenditures increase by $250 billion, equilibrium real GDP will:

• A) rise by $250 billion.
• B) fall by 300 billion
• C) rise by $500 billion.
• D) rise by $75 billion.
• E) rise by $100 billion.

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Definitions:

Credit Terms

The agreements between buyers and sellers that stipulate payment amounts and due dates, often including discounts for early payment or penalties for late payment.

Net 30

A payment term indicating that the full payment is due within 30 days of the invoice date.

Economic Order Quantity

A formula used in inventory management to determine the optimal order size that minimizes the total holding costs and ordering costs.