5 Suppose that you have an AEF at a price level of p = $100given by:AEF = 1,200+ 0.80YSuppose also that for every $1 increase in the price level,desired consumtion decreases by $3.If the price level in the economy rises by $300, then thenew AEF will be given by:AEF=X+0.80YIn the asbove new AEF, what is X?Note: round your answers to two decimal places. Also, forexample, submit an answer of $14,678 as 14678.00.

In the Aggregate Expenditure Function (AEF) we have an autonomous part and induced part. The 1,200…

Answered: Suppose that you have an AEF at a price…

Suppose that you have an AEF at a price level of p = $100 given by: AEF = 1,200+ 0.80Y Suppose also that for every $1 increase in the price level, desired consumtion decreases by $3.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that you have an AEF at a price level of p = $100
given by:
AEF = 1,200+ 0.80Y
Suppose also that for every $1 increase in the price level,
desired consumtion decreases by $3.
If the price level in the economy rises by $300, then the
new AEF will be given by:
AEF=X+0.80Y
In the asbove new AEF, what is X?
Note: round your answers to two decimal places. Also, for
example, submit an answer of $14,678 as 14678.00.

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