In an economy, autonomous spending is $20 trillion and the slope of the AE curve is 0.8. Equilibrium expenditure is ________. With a fixed price level, the multiplier is ________.

Question

Quizplus · Accepted Answer

The equilibrium expenditure is calculated using the formula: Equilibrium Expenditure = Autonomous Spending / (1 - Slope of AE curve). Here, it is $20 trillion / (1 - 0.8) = $100 trillion. The multiplier is 1 / (1 - Slope of AE curve) = 1 / (1 - 0.8) = 5.

In an Economy, Autonomous Spending Is $20 Trillion and the Slope