Question

You have the following information on an economy.
C = 0.8Yd
I = GHS78
G = GHS70
TR = GHS40
T = 0.25Y
Derive an expression for aggregate expenditure based on this model.
Determine the ste

Answer 1

$AE = C + I + G + TR$

$C = 0.8 (Y-T)$

$C = 0.8Y - 0.8(0.25)Y$

$C = 0.8 Y -0.2 Y$ $= 0.6Y$

$AE = 70 + 40 + 78 + 0.6Y$

$AE = 188 + 0.6Y$