In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Planned aggregate expenditure equals:
A. 320 + 0.25Y.
B. 320 + 0.75Y.
C. 290 + 0.25Y.
D. 290 + 0.75Y.
Answer: D
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The two key factors that trigger speculative attacks on emerging market currencies are
A) deterioration in bank balance sheets and severe fiscal imbalances. B) deterioration in bank balance sheets and low interest rates abroad. C) low interest rates abroad and severe fiscal imbalances. D) low interest rates abroad and rising asset prices.
The two types of asymmetric information situations are those with
a. hidden costs and hidden actions b. hidden characteristics and hidden costs c. hidden actions and hidden selection d. hidden characteristics and hidden actions e. moral hazard and natural selection
Which of the following is not an argument in favor of inward-oriented strategies?
a. A newly developing economy needs protection from foreign competition. b. Government restrictions are necessary to maximize the rate of economic growth. c. Deteriorating prices of primary products in relation to manufactured goods expose developing countries to increasingly unfavorable terms of trade. d. Developing countries should compete on the basis of comparative advantage. e. Economic growth requires rapid industrialization and a shift away from primary products.
An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?
A. 1/3 radio B. 12 radios C. 3 radios D. 1/5 radio