In a Certain Economy, the Components of Aggregate Spending Are

question 87

Multiple Choice

In a certain economy, the components of aggregate spending are given by: C = 500 + 0.75(Y - T) - 500r
I = 300 - 500r
G = 400
NX = 30
T = 40
Given the information about the economy above, what would be the impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) ?

• A) Aggregate expenditures would increase by 500 units.
• B) Aggregate expenditures would decrease by 10 units.
• C) Aggregate expenditures would decrease by 1,000 units.
• D) Aggregate expenditures would decrease by 5 units.

---

Definitions:

Second-Generation

Refers to the offspring of immigrants or the subsequent version or improvement of a product or technology.

Antipsychotics

A class of medication primarily used to manage psychosis, including delusions, hallucinations, paranoia, or disordered thought, found in certain mental health conditions such as schizophrenia.

Extrapyramidal Side Effects

Involuntary movements or motor control disturbances associated with certain medications, typically those used to treat psychiatric disorders.

Weight Gain

An increase in body weight, which can result from various factors, including increased calorie intake, decreased physical activity, or underlying health conditions.