With no taxes or transfers, disposable income = GDP, denoted Y. In trillions of dollars, - marginal propensity to save (MPS) is 0.75 - autonomous consumptioon is 10 - planned investment is 10 What is the aggregate expenditure function? AE= 0.25*Y + 20 AE= 0.20*Y + 15

With no taxes or transfers, disposable income = GDP, denoted Y. In trillions of dollars, - marginal propensity to save (MPS) is 0.75 - autonomous consumptioon is 10 - planned investment is 10 What is the aggregate expenditure function? AE= 0.25Y + 20 AE= 0.20Y + 15

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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Question

With no taxes or transfers, disposable income = GDP, denoted Y. In trillions of dollars,
- marginal propensity to save (MPS) is 0.75
- autonomous consumptioon is 10
- planned investment is 10
What is the aggregate expenditure function?
AE= 0.25*Y + 20
AE= 0.20*Y + 15
AE= 0.80*Y + 10
AE= 0.80*Y + 25

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