Suppose the aggregate expenditure schedule for an economy is given by the equation: AE = 800 + 0.8Y Where AE represents the aggregate expenditure and Y represents the national income (output) level. Calculate the equilibrium level of national income in this economy.

Suppose the aggregate expenditure schedule for an economy is given by the equation: AE = 800 + 0.8Y Where AE represents the aggregate expenditure and Y represents the national income (output) level. Calculate the equilibrium level of national income in this economy.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter15: Gross Domestic Product

Section: Chapter Questions

Problem 8SQP

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Suppose the aggregate expenditure schedule for an economy is given by the equation:

AE = 800 + 0.8Y

Where AE represents the aggregate expenditure and Y represents the national income (output) level.

Calculate the equilibrium level of national income in this economy.

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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Step 1: Understand the aggregate expenditure model

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Step 2: Set aggregate expenditure equal to national income

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Step 3: Solve for the equilibrium level of national income

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