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

Question

Quizplus · Accepted Answer

Autonomous expenditures include planned investment, government purchases, net exports, and the autonomous part of consumption. Here, autonomous consumption is $500, so the total is $500 (consumption) + $200 (investment) + $300 (government) + $100 (net exports) = $1,100.

Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate