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The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

question 34

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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. 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<sub>D</sub> E) AE = 250 +(0.75) Y + (0.2) Y<sub>D</sub> FIGURE 22-2
-Refer to Figure 22-2.Which of the following equations describes the aggregate expenditure function for this economy?


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