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Question 3 25 pts The variables in the model for the aggregate expenditures in an economy are: Co = 250, lo = 225, Go =
Question 3 25 pts The variables in the model for the aggregate expenditures in an economy are: Co = 250, lo = 225, Go = 125, Xo = 125, Mo = 100, Tp = 50, c1 = 0.75, i1 = 0.15, and m1 = 0.20. Note that disposable income is gross income minus personal tax: YD = Y - Tp. Aggregate expenditure is equal to sum of the autonomous spending in each sector plus the spending induced by disposable income: E=Co+c1(Y- Tp) + lo+ i1Y + Go +Xo - Mo-miY = Co-CITp+ lo+ Go+ Xo - Mo+ (c1+i1-m1)YD. Determine the new aggregate expenditure curve at the new autonomous consumption spending level of 200. Assume that the variables are constant. E. Compute for the new equilibrium aggregate real income Y using the new aggregate expenditure curve and multiplier effect in the economy
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