In the equation PAE = A + bY, autonomous sources of spending are captured by:
A) b.
B) Y.
C) A.
D) PAE.

Name: In the equation PAE = A + bY, autonomous sources of spending are captured by: A) b. B) Y. C) A. D) PAE.
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Question

Quizplus · Accepted Answer

Autonomous sources of spending are captured by the intercept term A in the equation. It represents the level of spending that occurs even when there is no income or output (Y) in the economy. Therefore, choice C is the best answer.

In the Equation PAE = a + BY, Autonomous Sources