Exhibit 11-5 -In an Economy Characterized by the Aggregate Expenditure Line in Expenditure

question 8

Multiple Choice

Exhibit 11-5
-In an economy characterized by the aggregate expenditure line in Exhibit 11-5,how would a $100 decrease in autonomous net taxes impact real GDP?

• A)decrease real GDP by $200
• B)decrease real GDP by $100
• C)no impact on real GDP
• D)increase real GDP by $100
• E)increase real GDP by $200

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Definitions:

Asset

An economic resource owned or controlled by an individual or company, expected to produce future benefits.

Strike Price

The specified price at which an options contract can be executed, determining the buying or selling price of the underlying asset.

Option Contract

A contract which grants the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price within a specific time period.

Underlying Asset

The specific financial instrument (e.g., stock, bond, commodity) on which a derivative's value is based.