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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

In Exhibit 12(d), what does the vertical distance between the origin and the point at which the TE curve cuts the vertical axis represent?

To determine

Identify the autonomous spending.

Explanation

The expenditures are of three types in the closed economy and they are the consumption expenditure, investment expenditure, and the government purchases. These three expenditures in the economy are the expenditures that constitute the total expenditure of the economy. Thus, the total expenditure is the vertical summation of these three different expenditures of the economy. The TE of the economy is given as follows:

The TE curve cuts the vertical axis at a higher point from the point of origin...

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