Suppose a simple economy has no government, so that the aggregate expenditure function is: AE =C+1+X-IM where X = 70 and IM = 10 + 0.2Y. The following graph is Japan's consumption schedule and the amount of investment is $80 billion. a) Plot the aggregate expenditures and the equilibrium point. ▼Aggregate Expenditures Aggregate expenditures (billions of dollars) 480- 420- 360- 300- 240- 180- 120-45 degree 60- C 0 60 120 180 240 300 360 GDP (billions of dollars) 420 480 Reset b) What is the equilibrium GDP? Equilibrium GDP = $0 billion
Suppose a simple economy has no government, so that the aggregate expenditure function is: AE =C+1+X-IM where X = 70 and IM = 10 + 0.2Y. The following graph is Japan's consumption schedule and the amount of investment is $80 billion. a) Plot the aggregate expenditures and the equilibrium point. ▼Aggregate Expenditures Aggregate expenditures (billions of dollars) 480- 420- 360- 300- 240- 180- 120-45 degree 60- C 0 60 120 180 240 300 360 GDP (billions of dollars) 420 480 Reset b) What is the equilibrium GDP? Equilibrium GDP = $0 billion
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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