In a Certain Economy, the Components of Aggregate Spending Are

question 50

Multiple Choice

In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500r
I = 150 - 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 4 percent is ___, and the eventual impact on short-run equilibrium output is ______.

• A) an increase by 150 units; a decrease by 1,500 units.
• B) an increase by 15 units; a increase by 150 units.
• C) a decrease by 15 units, a decrease by 150 units.
• D) an increase by 150 units, an increase by 150 units.

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Definitions:

Existential Intelligence

A term from Howard Gardner's theory of multiple intelligences, highlighting an individual's capacity to tackle deep questions about human existence, such as the meaning of life, why we die, and how we got here.

Fluid Intelligence

The faculty to use rational thought and address challenges in new contexts without the help of learned material.

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The accumulation of knowledge, facts, and skills that one acquires through education and experience, which tends to increase with age.

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The ability to understand and interact effectively with others, involving skills such as empathy, communication, and understanding social cues.