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Assume that country XYZ has the following hypothetical data and equations: Autonomous consumption expenditure is $150 billion and the marginal propensity to save is 0.2.

Assume that country XYZ has the following hypothetical data and equations: Autonomous consumption expenditure is $150 billion and the marginal propensity to save is 0.2. Investment is $450 billion, government expenditure is $400 billion, and net taxes are a constant $300 billion.

a) What is the aggregate expenditure function?

b) Calculate equilibrium expenditure and real GDP?

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