Refer to the Information Provided in Figure 9

question 59

Multiple Choice

Refer to the information provided in Figure 9.1 below to answer the questions that follow. Figure 9.1
-Refer to Figure 9.1. Suppose that the consumption function is C = 400 + 0.5Yd and taxes are $200 billion, at equilibrium, what is the value of consumption?

• A) $2,000
• B) $1,350
• C) $1,300
• D) $1,150

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Definitions:

Prices Double

A situation where the prices of goods or services increase to twice their original amount.

Quasilinear Preferences

Consumer preferences where the utility function is linear in one of the goods, indicating constant marginal utility for that good.

Income Offer Curve

A graphical representation showing how an individual's optimal choice of goods to consume changes as their income changes.

Substitutes

Substitutes are goods or services that can be used in place of each other, where the consumption of one increases, the demand for the other decreases.