Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 120 + 0.86Y,I = 300,G = 520,T = 0,X = 180,IM = 0.12Y.Total autonomous spending in this model is
A)120.0.
B)1120.0.
C)420.0.
D)600.0.
E)828.8.

Question

Quizplus · Accepted Answer

Total autonomous spending in this model is calculated by adding up all the components of spending that do not depend on the level of income (Y). This includes autonomous consumption (C when Y=0), investment (I), government spending (G), and exports (X). The formula for total autonomous spending is: Autonomous Consumption + Investment + Government Spending + Exports = 120 + 300 + 520 + 180 = 1120.

Consider a Simple Macro Model with a Constant Price Level