The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc) = 0.75
• net tax rate (t) = 0.20
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars. FIGURE 22-2
Refer to Figure 22-2.Which of the following equations describes the aggregate expenditure function for this economy?

Question

The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc) = 0.75
• net tax rate (t) = 0.20
• no foreign trade
• fixed price level
• all expenditure and income figures are in billions of dollars.

FIGURE 22-2
Refer to Figure 22-2.Which of the following equations describes the aggregate expenditure function for this economy?

Quizplus · Accepted Answer

The Answer of The diagram below shows desired aggregate expenditure for a hypothetical economy.Assume the following features of this economy: • marginal propensity to consume (mpc)= 0.75 • net tax rate (t)= 0.20 • no foreign trade • fixed price level • all expenditure and income figures are in billions of dollars. FIGURE 22-2 Refer to Figure 22-2.Which of the following equations describes the aggregate expenditure function for this economy? A)AE = 250 + (0.6)Y B)AE = 225 + (0.75)Y C)AE = 250 +(0.15)Y D)AE = 75 + (0.75)Y + (0.2)Y_D E)AE = 250 +(0.75)Y + (0.2)Y_D

The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical