Question #59582

Aggregate Expenditure Model:
AEo = 532.
c = 0.8
Determine Y.

Expert's answer

Aggregate Expenditure Model: AEo = 532, c = 0.8.

In equilibrium aggregate expenditure equals to total GDP, so in this case Y = AE.

AE = AEo + c*AE, so:

Y = 532 + 0.8*Y,

0.2Y = 532,

Y = 2660.

In equilibrium aggregate expenditure equals to total GDP, so in this case Y = AE.

AE = AEo + c*AE, so:

Y = 532 + 0.8*Y,

0.2Y = 532,

Y = 2660.

## Comments

## Leave a comment