Consider the simplest macro model with demand-determined output.The equations are: C = 150 + 0.8Yd,Yd = Y-T,I = 400,G = 700,T = .2Y,X = 130,and IM = 0.14Y.Autonomous expenditures in this model are
A)1120.
B)1350.
C)1380.
D)2700.
E)5400.

Question

Quizplus · Accepted Answer

Autonomous expenditures are calculated as the sum of autonomous consumption (150), investment (400), government spending (700), and net exports (X - IM), which is 130 - 0.14Y. Since autonomous expenditures do not depend on Y, we only consider the constant parts: 150 + 400 + 700 + 130 = 1380.

Consider the Simplest Macro Model with Demand-Determined Output