The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 91

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy:
∙ marginal propensity to consume (mpc) = 0.75
∙ net tax rate (t) = 0.20
∙ no foreign trade
∙ fixed price level
∙ all expenditure and income figures are in billions of dollars. FIGURE 22-2
-Refer to Figure 22-2.What is the equilibrium national income in this economy?

• A)$187.50
• B)$294
• C)$333.34
• D)$625
• E)$1666.67

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Definitions:

Budgeted Sales

An estimated amount of sales in units or dollars that a company plans to achieve during a certain period, often used for planning and operational purposes.

Finished Goods Inventory

Finished goods inventory consists of items that have completed the manufacturing process and are ready for sale.

Raw Materials Inventory

The stock of basic materials that are used in the production process but have not yet been processed.

Raw Material Purchases

The cost associated with acquiring raw materials needed for production.