Answer to Question #59582 in Macroeconomics for ali

Question #59582

Aggregate Expenditure Model:
AEo = 532.
c = 0.8
Determine Y.

Expert's answer

Aggregate Expenditure Model: AEo = 532, c = 0.8.
In equilibrium aggregate expenditure equals to total GDP, so in this case Y = AE.
AE = AEo + c*AE, so:
Y = 532 + 0.8*Y,
0.2Y = 532,
Y = 2660.

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