If consumption is given by C = $10 billion + 0.5Y, and autonomous planned investment,government purchases, and net exports amount to $5 billion, then aggregate expenditures are $20 billion if Y = $10 billion.

Question

Quizplus · Accepted Answer

Aggregate expenditures (AE) = C + I + G + NX, where C is consumption, I is planned investment, G is government purchases, and NX is net exports.

Plugging in the given values:

AE = (10 + 0.5(10)) + 5 + 0 + 0 = 20

Therefore, the answer is A, true.

If Consumption Is Given by C = $10 Billion