QUESTION 364036322824201612840O b) 3/2c) 2/3d) 1/3E,QEO e) 3162436. What is the value of the "simple income multiplier" for autonomous spending?a) zero3240oAES

The following graph is provided:The curves/lines depict the following parameters:C = ConsumptionI = InvestmentAE = Aggregate ExpenditureQ = Output/IncomeS = SavingThe autonomous spending multiplier is a key concept in Keynesian economics that describes how changes in autonomous spending can lead to larger changes in aggregate output.It is calculated as:where,MPC = marginal propensity to consumeStep 1: Calculate MPCThe slope of the aggregate expenditure line represents the marginal propensity to consume (MPC).To calculate the slope of AE line, we need to identify any 2 coordinates on the graph as shown below:On the AE line, 2 coordinates are identified in the above graph depicted by yellow lines. The coordinates are:(x1, y1) = (6, 12)(x2, y2) = (24, 24)Thus, Marginal Propensity to Consume (MPC) = Step 2: Calculate autonomous spending simple income multiplierThe correct answer is Option (e) = 3The correct answer is Option (e) = 3

Answered: 36. What is the value of the "simple…

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36. What is the value of the "simple income multiplier" for autonomous spending? a) zero b) 3/2 c) 2/3 d) 1/3 e) 3

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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