c. National-Income model: Closed economy i. Aggregate expenditure: AE = C +1 + G Note: Exogenous investment and government expenditure: / lo, G = Go ii. Consumption function: C = a + c(Y – T), where a > 0, and 0 0, and 0

c. National-Income model: Closed economy i. Aggregate expenditure: AE = C +1 + G Note: Exogenous investment and government expenditure: / lo, G = Go ii. Consumption function: C = a + c(Y – T), where a > 0, and 0 0, and 0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

pls answer C on paper

c. National-Income model: Closed economy
i. Aggregate expenditure: AE = C +1 + G
Note: Exogenous investment and government expenditure: / = lo, G = Go
ii. Consumption function: C = a + c(Y – T), where a > 0, and 0 <c<1
Note: C is consumption, Y is income, and T is tax payment. Hence, Y – T is disposable
income. a is constant and c is the marginal propensity to consume.
where d > 0, and 0 <t <1
Note: T is the tax payment and t is the tax rate. d is constant and t is a parameter.
iii. Tax function: T = d + tY,

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