Suppose an economy has total autonomous expenditure of 100 and a change in household behaviour increases the slope of the AE function from 0.75 to 0.80. The initial equilibrium income was _______ and
The new equilibrium income will be __________.
A) 100, 100.
B) 750, 800.
C) 250, 200.
D) 400, 500.

Question

Quizplus · Accepted Answer

The initial equilibrium income is calculated as 100 / (1 - 0.75) = 400. The new equilibrium income is calculated as 100 / (1 - 0.80) = 500.

Suppose an Economy Has Total Autonomous Expenditure of 100 and a Change