CS 24 Economics Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation:AE = 400 +0.75YThe equilibrium level of income in this economy is equal to$ 1600. (Round your response to the nearest dollar.)Suppose the value of the marginal propensity to consume decreases to 0.60.1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE₁'. Make sure that the linestarts at y-axis and extends to the right.2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E₁'.Carefully follow the instructions above, and only draw the required objects.Desired Aggregate Expenditure1,800-1,500-1,200-900-600-300-0+Aggregate Expenditure Function0400E₂800Actual National Income1,200 1,60045 Mine21AEO2,000

Given Initial aggregate expenditure function AE =400+0.75Y Here 0.75 is the marginal propensity to…

Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation: AE = 400 +0.75Y The equilibrium level of income in this economy is equal to $ 1600. (Round your response to the nearest dollar.) Suppose the value of the marginal propensity to consume decreases to 0.60. 1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE, . Make sure that the line starts at y-axis and extends to the right. 2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E,'. Carefully follow the instructions above, and only draw the required objects. Desired Aggregate Expenditure 1,800- 1,500- 1,200- 900- 600+ 300- Aggregate Expenditure Function ok 0 E₁ ⠀ 1 1 I ⠀ : 400 800 1,200 1,600 Actual National Income Q 45%line Q AEG 2,000

Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation: AE = 400 +0.75Y The equilibrium level of income in this economy is equal to $ 1600. (Round your response to the nearest dollar.) Suppose the value of the marginal propensity to consume decreases to 0.60. 1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE, . Make sure that the line starts at y-axis and extends to the right. 2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E,'. Carefully follow the instructions above, and only draw the required objects. Desired Aggregate Expenditure 1,800- 1,500- 1,200- 900- 600+ 300- Aggregate Expenditure Function ok 0 E₁ ⠀ 1 1 I ⠀ : 400 800 1,200 1,600 Actual National Income Q 45%line Q AEG 2,000

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

CS 24

Economics

Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation:
AE = 400 +0.75Y
The equilibrium level of income in this economy is equal to
$ 1600. (Round your response to the nearest dollar.)
Suppose the value of the marginal propensity to consume decreases to 0.60.
1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE₁'. Make sure that the line
starts at y-axis and extends to the right.
2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E₁'.
Carefully follow the instructions above, and only draw the required objects.
Desired Aggregate Expenditure
1,800-
1,500-
1,200-
900-
600-
300-
0+
Aggregate Expenditure Function
0
400
E₂
800
Actual National Income
1,200 1,600
45 Mine
21
AEO
2,000

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