The following graph shows the consumption function (C) for a hypothetical private closed economy and a 45-degree line along which aggregate expenditure equals real GDP (AEY). Recall that a private closed economy does not have government and does not trade with the rest of the world (so G=0 and (X-M)-0). In a private closed economy, real GDP is equal to disposable income. At the current real interest rate, the level of investment in this economy is equal to $100 billion at each level of real GDP. Use the blue line (circle symbols) to plot this economy's initial aggregate expenditure line, (C+1). Then, use the black point (X symbol) to indicate this economy's initial equilibrium output. Dashed drop lines will automatically extend to both axes. (Hint: You can see two of the coordinates along the consumption function by mousing over the green triangles on the graph.) Aggregate Expenditures 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 0 100 200 300 400 Real GDP 500 AE Y 600 с 700 800 Aggregate Expenditure ?

The following graph shows the consumption function (C) for a hypothetical private closed economy and a 45-degree line along which aggregate expenditure equals real GDP (AEY). Recall that a private closed economy does not have government and does not trade with the rest of the world (so G=0 and (X-M)-0). In a private closed economy, real GDP is equal to disposable income. At the current real interest rate, the level of investment in this economy is equal to $100 billion at each level of real GDP. Use the blue line (circle symbols) to plot this economy's initial aggregate expenditure line, (C+1). Then, use the black point (X symbol) to indicate this economy's initial equilibrium output. Dashed drop lines will automatically extend to both axes. (Hint: You can see two of the coordinates along the consumption function by mousing over the green triangles on the graph.) Aggregate Expenditures 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 0 100 200 300 400 Real GDP 500 AE Y 600 с 700 800 Aggregate Expenditure ?

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 3TY

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In a simple closed economy, consumption is given by the relationship C=0.75Y, where C is consumption expenditure and Y is GDP. If government expenditure is £150 million and investment is £50 million, what will be the value of GDP of the economy? a) £200 million b) £750 million c) £315 million d) £800 million
The Following Questions include graphs that I cannot upload if you can please help with visuals also, thank you. The following graph shows the consumption function (C) for a hypothetical private closed economy and a 45-degree line along which aggregate expenditure equals real GDP (AE=Y). Recall that a private closed economy does not have government and does not trade with the rest of the world (so G=0 and (X-M)=0). In a private closed economy, real GDP is equal to disposable income. At the current real interest rate, the level of investment in this economy is equal to $50 billion at each level of real GDP. Use the blue line (circle symbols) to plot this economy's initial aggregate expenditure line, (C + I). Then, use the black point (X symbol) to indicate this economy's initial equilibrium output. Dashed drop lines will automatically extend to both axes. (Hint: You can see two of the coordinates along the consumption function by mousing over the green triangles on the graph.) At the…
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