Table 20-1 Suppose the Economy of Macroland Is Described by the Following

question 132

Multiple Choice

Table 20-1
Suppose the economy of Macroland is described by the following:
C = 200 + .8DI (DI = disposable income)
I = 300 + .2Y − 50r (Y = GDP)
(r, the interest rate, is measured in percentage points.For example, a 9 percent interest rate is r = 9) .
For this economy, assume that the Federal Reserve uses its monetary policy to peg the interest rate at
r = 5
G = 750
T = .25Y
X = 200
M = 150 + .2Y
Hint: DI = Y − T
-From Table 20-1, find the budget deficit or surplus for Macroland.

• A)125.50 
• B)−93.75 
• C)−126.25 
• D)−154.75

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Definitions:

Aleurone Cells

Specialized cells found in the outer layer of seeds, particularly in cereal grains, that play a role in nutrient storage and mobilization during germination.

α-Amylase

An enzyme that breaks down starches into sugars, playing a critical role in the digestion of carbohydrates.

Gibberellin

A plant hormone involved in many aspects of plant growth and development, such as stem elongation, flowering, and seed germination

Stem Elongation

A phase of plant growth where the stem or shoot rapidly increases in length due to cell division and elongation.