equation for ae = y =640 − 2.5rfirst image is just a resource, actual question is question 2. Thank you so much :) We use the following terminology in this part: aggregate income Y and disposable incomeYa (= Y –T), consumption function C(Ya), planned investment function I(r), governmentspending G, and taxation T = tY where t is the marginal tax rate; r% denotes the realinterest rate in the economy. (Note, r is in percentage points, e.g. r = 2 means the interestrate is 2%. When doing calculations, the interest rate should not simply be inserted indecimal form. For example, if r = 2 then I(2) = 124 – 2 = 122.)Consider a hypothetical economy where:• C(Ya) = 12 + 0.75 × (Y – T)• I(r) = 124 – 1 × r• G = 120• t = 20% 2. Write down an expression for the Investment-Savings (IS) Curve. (Hint: First usethe AE equation to find an expression for equilibrium Y. Next, remember that theIS equation takes the form of r =..)

The consumption function of a hypothetical economy is The investment function is The government…

2. Write down an expression for the Investment-Savings (IS) Curve. (Hint: First use the AE equation to find an expression for equilibrium Y. Next, remember that the IS equation takes the form of r = ....)

2. Write down an expression for the Investment-Savings (IS) Curve. (Hint: First use the AE equation to find an expression for equilibrium Y. Next, remember that the IS equation takes the form of r = ....)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

equation for ae = y =640 − 2.5r

first image is just a resource, actual question is question 2.

Thank you so much :)

We use the following terminology in this part: aggregate income Y and disposable income
Ya (= Y –T), consumption function C(Ya), planned investment function I(r), government
spending G, and taxation T = tY where t is the marginal tax rate; r% denotes the real
interest rate in the economy. (Note, r is in percentage points, e.g. r = 2 means the interest
rate is 2%. When doing calculations, the interest rate should not simply be inserted in
decimal form. For example, if r = 2 then I(2) = 124 – 2 = 122.)
Consider a hypothetical economy where:
• C(Ya) = 12 + 0.75 × (Y – T)
• I(r) = 124 – 1 × r
• G = 120
• t = 20%

2. Write down an expression for the Investment-Savings (IS) Curve. (Hint: First use
the AE equation to find an expression for equilibrium Y. Next, remember that the
IS equation takes the form of r =..)

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