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Also for the AE curve=abTa+I+G+X : can you label each part of the equation on what they mean? that would really help me out thanks
Also for the AE curve=abTa+I+G+X : can you label each part of the equation on what they mean? that would really help me out thanks
In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and the price level is fixed.
- What is the consumption function?
- What is the equation of theAEcurve?
- Calculate equilibrium expenditure.
- Calculate the multiplier.
- If investment decreases to $150 billion, what is the change in equilibrium expenditure?
- Describe the process in part (e) that moves the economy to its new equilibrium expenditure
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