An economy is described by the following equations: = 1,500 + 0.9 ( Y – T ) = 10
ID: 1217243 • Letter: A
Question
An economy is described by the following equations:
= 1,500 + 0.9 (Y – T)
= 1000
= 1,500
= 100
= 1,500
= 29,000
a. Find a numerical equation linking planned aggregate expenditure to output.
Instruction: Round the value for mpc to one decimal place.
PAE = + Y.
b. Find autonomous expenditure and induced expenditure in this economy.
Instruction: Round the value for mpc to one decimal place.
Autonomous expenditure: .
Induced expenditure: Y.
= 1,500 + 0.9 (Y – T)
I p= 1000
G= 1,500
NX= 100
T= 1,500
Y*= 29,000
Explanation / Answer
(a) AD = C + I + G + NX
= 1,500 + 0.9 (Y – T) + 1000 + 1500 + 100
= 1,500 + 0.9 (Y – 1500) + 1000 + 1500 + 100
= 1,500 + 0.9Y – 1350 + 1000 + 1500 + 100
AD = 2750 + 0.9Y (PAE)
(b) Autonomous expenditure: 2750
Induced expenditure: 0.9Y
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.