1. Consider an economy with the following characteristics:Autonomous part of consumption expenditure = $15 billionInvestment = $5 billion%3DGovernment expenditures of goods and services = $50 billionExports = $5 billionSlope of the AE function = 0.5There are no autonomous imports.%3Da. What is the equation of the AE function?b. Draw a graph containing the AE curve for this economy as well as a 45° line.C. What is equilibrium expenditure/real GDP?

Aggregate expenditure is the sum of consumption, investment, government spending and net exports.

1. Consider an economy with the following characteristics: Autonomous part of consumption expenditure = $15 billion Investment = $5 billion %3D Government expenditures of goods and services = $50 billion Exports = $5 billion %3D Slope of the AE function = 0.5 There are no autonomous imports. a. What is the equation of the AE function? b. Draw a graph containing the AE curve for this economy as well as a 45° lir C. What is equilibrium expenditure/real GDP?

1. Consider an economy with the following characteristics: Autonomous part of consumption expenditure = $15 billion Investment = $5 billion %3D Government expenditures of goods and services = $50 billion Exports = $5 billion %3D Slope of the AE function = 0.5 There are no autonomous imports. a. What is the equation of the AE function? b. Draw a graph containing the AE curve for this economy as well as a 45° lir C. What is equilibrium expenditure/real GDP?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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