Suppose the Consumption Equation Is Represented by the Following: C

question 45

Multiple Choice

Suppose the consumption equation is represented by the following: C = 250 + .75YD.Now assumm government spending increases by 100 for the above economy.Given the above information,we know that equilibrium output will increase by

• A)200.
• B)400.
• C)800.
• D)1000.
• E) none of the above

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Definitions:

Tariff

A tariff is a tax imposed by a government on imported or exported goods to regulate trade, often to protect domestic industries.

Free Trade

An economic policy that allows imports and exports between countries with minimal governmental restrictions or tariffs.

Consumer Surplus

The discrepancy between the sum consumers are ready and capable of paying for a service or product and the sum they actually spend.

Producer Surplus

The discrepancy between what producers anticipate accepting for a good or service and what they end up being paid.