-Refer to the above information to answer this question.What is the algebraic expression for the aggregate expenditure function?
A)AE = 500 + 0.5Y.
B)AE = 500 + 0.67Y.
C)AE = 520 + 0.67Y.
D)AE = 750 + 0.67Y.

Question

-Refer to the above information to answer this question.What is the algebraic expression for the aggregate expenditure function?
A)AE = 500 + 0.5Y. 
B)AE = 500 + 0.67Y. 
C)AE = 520 + 0.67Y. 
D)AE = 750 + 0.67Y.

Quizplus · Accepted Answer

The aggregate expenditure (AE) function is typically represented as AE = autonomous spending + marginal propensity to consume (MPC) * income (Y). The given option A, AE = 500 + 0.5Y, correctly represents an AE function with autonomous spending of 500 and an MPC of 0.5.

-Refer to the Above Information to Answer This Question