The assignment uses the following terminology in this part: aggregate income Y and dis- posable income Yd (= Y T ), consumption function C(Yd), planned investment function I(r), government spending G, and taxation T; r% denotes the real interest rate in the economy. (Note, r is in percentage points, e.g. r = 2 means the interest rate is 2%. When doing calculations, the interest rate should not simply be inserted in decimal form. For example, if I(r) = 104 1 r and r = 10 then I(10) = 104 1(10) = 94.)

Consider a hypothetical economy where:

• C(Yd)=0+0.7(Y T)
• I(r)=1041r
• G = 270
• T = 100

1. Using the information above, write out the planned Aggregate Expenditure equa- tion. (Hint: Remember that this takes the form of AE = . . . .)

Need help with question 1 please