In the Economy of Jokey Island, Autonomous Consumption Expenditure Is

question 218

Short Answer

In the economy of Jokey Island, autonomous consumption expenditure is $60 million, and the marginal propensity to consume is 0.6. Investment is $110 million, government expenditure is $70 million, and there are no income taxes. Investment and government expenditure are constant-they do not vary with income. The islan does not trade with the rest of the world.
a) Draw the aggregate expenditure curve.
b) What is the island's autonomous aggregate expenditure?
c) What is the size of the multiplier in Jokey Island's economy?
d) What is the island's aggregate planned expenditure and what is happening to inventories when real GDP is million?
e) What is the economy's equilibrium aggregate expenditure?

---

Definitions:

Significant Wage Increases

Notable uplifts in employee pay rates, often occurring in response to factors like inflation, productivity improvements, or labor market dynamics.

Right-To-Work Laws

Legislation that prohibits agreements between labor unions and employers that make union membership or payment of union dues a condition of employment.

Government Employee

An individual employed by a governmental organization, either at the local, state, or federal level.

Government Employees

Individuals who work within various branches of government (federal, state, local) and whose salaries are paid by public funds.