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Use the point drawing tool to plot and label the equilibrium level of income. Carefully follow the instructions above, and only draw the required object.

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

The desired aggregate expenditure function of an economy is illustrated in the graph to the right. The
dashed line, Y*, shows the potential level of national income in this economy. The marginal propensity
to spend is 0.75.
Use the point drawing tool to plot and label the equilibrium level of income.
Carefully follow the instructions above, and only draw the required object.
Desired Aggregate Expenditure ($ billions)
3,750-
3,000-
2,250-
1,500+
750 500
0-
Aggregate Expenditure Function
0
45 line
AE
Y = 3,000
4,000
1,000
2,000
3,000
Actual National Income ($ billions)

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