Table 13.1.Canada's Saving,Investment,Import,and Export Functions (in billions of dollars) Under a System of Fixed Exchange Rates
Export Function X = 3000
Investment Function I = 1000
Saving Function S = -1000 + 0.2Y
Import Function M = 500 + 0.25Y
-Referring to Table 13.1,if Canada's income rises by $200 billion,imports would rise by:
A) $50 billion
B) $75 billion
C) $100 billion
D) $125 billion

Question

Quizplus · Accepted Answer

The import function is M = 500 + 0.25Y. If Canada's income rises by $200 billion, then imports would rise by 0.25 * $200 billion = $50 billion.

Table 131Canada's Saving,Investment,Import,and Export Functions (In Billions of Dollars) Under a a System