   Chapter 10, Problem 15E

Chapter
Section
Textbook Problem

Use the information in the following table to do exercises 8-15: What are the equations for the consumption, net exports, and aggregate expenditures functions?

To determine

Use the information in the following table: What are the equations for the consumption, net exports and aggregate expenditures functions?

Explanation

Given the data as follows

Consumption function is calculated as

C=Ca+cY

We have Y=500, C=480 and MPC=0.9

Substituting the values in above formula, we get

480=Ca+(0.9×500)

480=Ca+450

Ca=480450

Ca=30

Autonomous consumption is constant at every level of income.

Thus, consumption function is given as

C=30+0

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