PROBLEM: Your country generally spends $_A_ out of every $100 of income generated in a year. We also know that if income happened to be zero that there would still be expenditures of $_B_ necessary for the population to survive.

Values are A = 80 and B = 200

1)Derive/build the Aggregate Expenditure equation for your country and solve for the expenditure equilibrium level of income. MPE, AE Function, solve for Ye.

2)Draw a complete AE diagram for you country labeling: both axes , the AE function , the AE=Y expenditure equilibrium condition line, and the actual level of Y at equilibrium (a number) and autonomous spending (a number).

3)What is the slope of your county's AE line?

What IS this number (Hint: What does it represent? Define it in words).

Calculate the Multiplier in your country.