Suppose the aggregate expenditure model is
C = C₀ + cYd
I=I₀
G=G₀
NT = tY
YD=Y-NT
where C₀ is autonomous consumption, c is the marginal propensity to expend, Y is income, C is consumption, Yd is disposable income, I is investment, G is government expenditures, NT is net taxes, t is the net tax rate.
(a) Derive the formula for equilibrium national income.
(b) What is the slope of the AE function?
(c) Derive the multiplier for an increase in investment from I₀ to I₁.

Question

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The Answer of Suppose the aggregate expenditure model is C = C₀ + cYd I=I₀ G=G₀ NT = tY YD=Y-NT where C₀ is autonomous consumption, c is the marginal propensity to expend, Y is income, C is consumption, Yd is disposable income, I is investment, G is government expenditures, NT is net taxes, t is the net tax rate. (a) Derive the formula for equilibrium national income. (b) What is the slope of the AE function? (c) Derive the multiplier for an increase in investment from I₀ to I₁.

Suppose the Aggregate Expenditure Model Is