Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. If the consumption function is JC = $500 + 0.8Y, planned investment = $200, government purchases = $300,
Jnet exports = $100, and real GDP = $1,000, what is the amount of aggregate expenditures?
A) $800
B) $1,000
C) $1,100
D) $1,900

Question

Quizplus · Accepted Answer

Aggregate expenditure is calculated as the sum of consumption, investment, government purchases, and net exports. Consumption is $500 + 0.8($1,000) = $1,300. Adding investment ($200), government purchases ($300), and net exports ($100) gives $1,900.

Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate