3. Consider the aggregate expenditure equation AE = 2,000 - 1,000+ 0.7 Y, where the letters represent the usual economic variables. Which of the following is correct? 1. (2,000 - 1,000r) constitute the autonomous components of aggregate expenditure. 2. The sign of the coefficient on the interest rate ris wrong, because aggregate expenditure rises with the interest rate. 3. The equation indicates that a change in the interest rate r shifts the aggregate expenditure line in the Keynesian Cross diagram.

3. Consider the aggregate expenditure equation AE = 2,000 - 1,000+ 0.7 Y, where the letters represent the usual economic variables. Which of the following is correct? 1. (2,000 - 1,000r) constitute the autonomous components of aggregate expenditure. 2. The sign of the coefficient on the interest rate ris wrong, because aggregate expenditure rises with the interest rate. 3. The equation indicates that a change in the interest rate r shifts the aggregate expenditure line in the Keynesian Cross diagram.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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