Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions. TABLE 21-3
-Refer to Table 21-3.The correct expression for the aggregate expenditure function for this economy is
A)AE = $760 billion
B)AE = $300 billion + 0.9Y
C)AE = $400 billion + 0.9Y
D)AE = $400 billion + 0.1 .
E)AE = $200 billion + 0.1 .

Question

Consider the following information describing a closed economy with no government and where aggregate output is demand determined.All dollar figures are in billions.  TABLE 21-3
-Refer to Table 21-3.The correct expression for the aggregate expenditure function for this economy is
A)AE = $760 billion 
B)AE = $300 billion + 0.9Y 
C)AE = $400 billion + 0.9Y 
D)AE = $400 billion + 0.1 . 
E)AE = $200 billion + 0.1 .

Quizplus · Accepted Answer

The aggregate expenditure (AE) function in a closed economy without government is given by: 
AE = C + I 
This is because there are no taxes and no government spending. 
From the table, we can see that C = $400 billion and I = 0.9Y. 
Substituting these values into the equation, we get: 
AE = $400 billion + 0.9Y 
Therefore, the correct expression for the aggregate expenditure function for this economy is (C) AE = $400 billion + 0.9Y.

Consider the Following Information Describing a Closed Economy with No