-Refer to the data above to answer this question.What is the equation for the aggregate expenditures function?
A)AE = 1,200.
B)AE = 2,500Y.
C)AE = 1,200 + 0.7Y.
D)AE = 1,200 + 0.8Y
E)AE = 1,400 + 0.8Y

Question

-Refer to the data above to answer this question.What is the equation for the aggregate expenditures function?
A)AE = 1,200. 
B)AE = 2,500Y. 
C)AE = 1,200 + 0.7Y. 
D)AE = 1,200 + 0.8Y 
E)AE = 1,400 + 0.8Y

Quizplus · Accepted Answer

The aggregate expenditures function typically takes the form AE = A + bY, where A is autonomous spending (spending that does not depend on income) and bY represents induced spending (spending that varies with income). Choice C, AE = 1,200 + 0.7Y, correctly represents this structure with 1,200 as autonomous spending and 0.7Y as the component of spending that changes with income level.

-Refer to the Data Above to Answer This Question