Use the Following Situation to Answer the Question : Situation

question 11

Multiple Choice

Use the following Situation to answer the question : situation 20-2 Assume a closed economy. Suppose that autonomous consumption equals $400, planned investment equals $500, government expenditure equals $200, net taxes equals $50, and the mpc equals 0.9.

-Using the information in situation 20-2,if government spending increases by $100,then the equilibrium aggregate output will change by

• A)-$1,000.
• B)-$100.
• C)$100.
• D)$1,000.

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Definitions:

Market Prices

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Cost Of Pears

This term likely refers to the expense associated with purchasing or producing pears, encompassing factors like labor, materials, and transportation.

Cost Of Bananas

The expense involved in purchasing bananas, typically influenced by factors like supply and demand.

Budget Constraint

The limitations on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.