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:

Serious Intent

A legal concept indicating that a party has a genuine and earnest intention to enter into a binding contract.

Angry

A strong feeling of displeasure or hostility, often resulting from frustration, injustice, or threat.

Requirement Contract

A requirement contract is a legal agreement in which one party agrees to purchase all its needs for a specific good or service from the other party.

Output Contract

An agreement in which a seller agrees to sell all of the production to a particular buyer, who agrees to buy it.