CS 24 Economics Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation:AE = 400 +0.75YThe equilibrium level of income in this economy is equal to$ 1600. (Round your response to the nearest dollar.)Suppose the value of the marginal propensity to consume decreases to 0.60.1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE₁'. Make sure that the linestarts at y-axis and extends to the right.2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E₁'.Carefully follow the instructions above, and only draw the required objects.Desired Aggregate Expenditure1,800-1,500-1,200-900-600-300-0+Aggregate Expenditure Function0400E₂800Actual National Income1,200 1,60045 Mine21AEO2,000

Given Initial aggregate expenditure function AE =400+0.75Y Here 0.75 is the marginal propensity to…

Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation: AE = 400 +0.75Y The equilibrium level of income in this economy is equal to $ 1600. (Round your response to the nearest dollar.) Suppose the value of the marginal propensity to consume decreases to 0.60. 1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE, . Make sure that the line starts at y-axis and extends to the right. 2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E,'. Carefully follow the instructions above, and only draw the required objects. Desired Aggregate Expenditure 1,800- 1,500- 1,200- 900- 600+ 300- Aggregate Expenditure Function ok 0 E₁ ⠀ 1 1 I ⠀ : 400 800 1,200 1,600 Actual National Income Q 45%line Q AEG 2,000

Refer to the diagram to the right. Initially, the aggregate expenditure curve is given by the following equation: AE = 400 +0.75Y The equilibrium level of income in this economy is equal to $ 1600. (Round your response to the nearest dollar.) Suppose the value of the marginal propensity to consume decreases to 0.60. 1. Use the line drawing tool to draw the new aggregate expenditure function. Label this line 'AE, . Make sure that the line starts at y-axis and extends to the right. 2. Use the point drawing tool to plot the new equilibrium level of income. Label this point 'E,'. Carefully follow the instructions above, and only draw the required objects. Desired Aggregate Expenditure 1,800- 1,500- 1,200- 900- 600+ 300- Aggregate Expenditure Function ok 0 E₁ ⠀ 1 1 I ⠀ : 400 800 1,200 1,600 Actual National Income Q 45%line Q AEG 2,000

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Also, use the black point (plus symbol) to indicate the equilibrium output at this price level.
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To graphically represent this, you can create a simple Keynesian cross diagram. On the vertical axis, plot the national income (Y), and on the horizontal axis, plot the aggregate expenditure (C + I + G). The equilibrium point will be where the aggregate expenditure line intersects the 45-degree line representing national income. also add explanation
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