You are given the following data concerning Freedonia, a legendary country: Consumption function: C = 250 +0.50Y • Investment function: I = 100 Aggregate expenditure function: AE = C +1 Equilibrium: AE = Y Describe the graph of the consumption function and the aggregate expenditure function, then identify the equilibrium level of income. The AE line is found by adding I to C. AE is The consumption function has an intercept of and a slope equal to MPC =[ equal to the MPC and an intercept of Equilibrium is achieved at Y = [ C with a slope

MACROECONOMICS FOR TODAY
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Author:Tucker
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Chapter8: The Keynesian Model
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You are given the following data concerning Freedonia, a legendary country:
• Consumption function: C = 250+ 0.50Y
• Investment function: I = 100
Aggregate expenditure function: AE = C + I
• Equilibrium: AE = Y
Describe the graph of the consumption function and the aggregate expenditure function, then identify the equilibrium level of income.
The AE line is found by adding I to C. AE is
The consumption function has an intercept of and a slope equal to MPC =
equal to the MPC and an intercept of Equilibrium is achieved at Y =
parallel to
steeper than
flatter than
C with a slope
Transcribed Image Text:You are given the following data concerning Freedonia, a legendary country: • Consumption function: C = 250+ 0.50Y • Investment function: I = 100 Aggregate expenditure function: AE = C + I • Equilibrium: AE = Y Describe the graph of the consumption function and the aggregate expenditure function, then identify the equilibrium level of income. The AE line is found by adding I to C. AE is The consumption function has an intercept of and a slope equal to MPC = equal to the MPC and an intercept of Equilibrium is achieved at Y = parallel to steeper than flatter than C with a slope
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