Use the aggregate expenditures model and the following values to answer the next question.AMPCIGT$9000.9$2,500$2,500$1,000Determine equilibrium consumption for this economy.
A. $45,000
B. $44,100
C. $50,000
D. $45,900
Answer: A
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In the above figure, the economy would most likely move from AD1 to AD2 because of
A) an aggregate supply shock. B) an aggregate demand shock. C) a recession. D) a depression.
Suppose there is a Fed purchase of bonds and simultaneous tax cut. We know with certainty that this combination of policies must cause
A) an increase in the interest rate (i). B) a reduction in i. C) an increase in output (Y). D) a reduction in Y.
Which of the following statements is TRUE?
A. Gross Domestic Product (GDP) may be calculated using the income or the expenditure approach. B. The value of intermediate goods is included in Gross Domestic Product (GDP). C. The value of illegal activities is included in Gross Domestic Product (GDP). D. The value of a homemaker's services is included in Gross Domestic Product (GDP).
If the MPS in an economy is .1, government could shift the aggregate demand curve rightward by $40 billion by:
A. increasing government spending by $4 billion. B. increasing government spending by $40 billion. C. decreasing taxes by $4 billion. D. increasing taxes by $4 billion.