In a Certain Economy, the Components of Aggregate Spending Are

question 100

Multiple Choice

In a certain economy, the components of aggregate spending are given by: C = 60 + 0.6(Y - T) - 1,000r
I = 200 - 1,000r
G = 200
NX = 50
T = 100
Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 6 percent is ___, and the eventual impact on short-run equilibrium output is ______.

• A) an increase by 800 units; a decrease by 2,000 units.
• B) an increase by 50 units; a decrease by 135 units.
• C) a decrease by 20 units, a decrease by 50 units.
• D) a decrease by 50 units, a decrease by 50 units.

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