Consider a Simple Macro Model with a Constant Price Level

question 116

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.The vertical intercept of the AE function is

• A)120.0.
• B)420.0.
• C)600.0.
• D)828.8.
• E)1120.0.

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Definitions:

Price Inelastic

Describes a situation where the demand for a good is not significantly affected by changes in its price.

Farm Incomes

The earnings generated from the operation of a farm, including profits from selling agricultural products.

Cross Elasticity

A metric showing how demand for a particular good is affected by changes in the pricing of another good.

DVD Players

Electronic devices designed to play discs in the DVD format, capable of producing both sound and video from digital optical disc storage.