The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc) = 0.80
• net tax rate (t) = 0.15
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars. FIGURE 22-3
Refer to Figure 22-3.Which of the following correctly describes the consumption function for this economy?

A) C = 325 + (0.65) Y
B) C = 350 + (0.68) Y_D
C) C = 350 + (0.68) Y
D) C = 1000 + (0.80)
E) C = 1000 + (0.80) Y