Consider the Following Information Describing an Economy with Demand-Determined Output

question 33

Multiple Choice

Consider the following information describing an economy with demand-determined output.There is no government or foreign trade.All dollar figures are in billions.
1.equilibrium condition is Y = C + I
2.marginal propensity to save = 0.20
3.the autonomous part of C is $50
4.investment is autonomous and equals $25
TABLE 21-5
-Refer to Table 21-5.At the equilibrium level of national income,the level of desired saving will be

• A)equal to consumption expenditures.
• B)$375.
• C)$50.
• D)$25.
• E)$0

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Definitions:

Marginal Expenditure

The incremental cost associated with the purchase of an additional unit of a good or service.

Marginal Product

The increase in output that arises from an additional unit of input.

Marginal Revenue

The additional income generated from the sale of one more unit of a product or service.

Marginal Product

Marginal product is the additional output that is produced by adding one more unit of a specific input, holding all other inputs constant.