Answer to Question #330331 in Macroeconomics for Isay

Question

Suppose that in an economy with no government the aggregate expenditure function is: AE = 50 + 0.8Y. (a) Draw a diagram showing the aggregate expenditure function, and indicate the level of planned expenditure when income is 150. (b) In this same diagram, show what would happen to aggregate expenditure if income increased to 200. (c) What are the levels of autonomous expenditure and induced expenditure at income levels of 150 and 200. (d) In this same diagram show what would happen if autonomous expenditure increased by 20. 

Answer 1

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