Refer to the information provided in Figure 24.1 below to answer the question(s) that follow.
Figure 24.1Refer to Figure 24.1. Suppose that the consumption function is C = 400 + 0.5Yd and taxes are $200 billion, at equilibrium the value of autonomous consumption is
A. $400 billion.
B. $300 billion.
C. $200 billion.
D. $100 billion.
Answer: A
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Which of the following is true?
i. Comparative advantage drives international trade. ii. Compared to a no-trade situation, in a market with imports, producer surplus is larger. iii. Tariffs lower the domestic price of imported goods. A) only i B) only ii C) only iii D) i and ii E) i and iii
A reflationary (expansionist) policy:
a) Increases aggregate supply b) Increases aggregate demand c) Decreases the price level d) Increases full employment
A country with limited official reserves is better off pursuing fixed exchange rates.
Answer the following statement true (T) or false (F)
Suppose that the rate of inflation in Japan is 1 percent and the rate of inflation in the United States is 3 percent. If the real exchange rate remains constant, the value of the U.S. dollar relative to the yen must:
A. fall by 2 percent. B. fall by 4 percent. C. rise by 4 percent. D. rise by 2 percent.