In a Certain Economy, the Components of Planned Spending Are

question 23

Multiple Choice

In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r
Ip = 200 - 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, what would be the impact on autonomous expenditures of a one-percentage-point increase in the real interest rate?

• A) Autonomous expenditures would increase by 35 units.
• B) Autonomous expenditures would decrease by 700 units.
• C) Autonomous expenditures would decrease by 35 units.
• D) Autonomous expenditures would decrease by 7 units.

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Definitions:

Caffeine

A stimulant found in coffee, tea, chocolate, and certain soft drinks, known for its ability to increase alertness and reduce fatigue.

Shakiness

The sensation or visible sign of trembling, often resulting from anxiety, weakness, or illness.

Disinhibited

Exhibiting reduced restraint or a lack of inhibition in behavior and speech, often resulting from emotional distress, brain injury, or other conditions.

Depressant

A class of drugs that reduce neural activity and slow down the functions of the body.