If planned aggregate expenditure in an economy can be written as: PAE = 1,000 + 0.5Y,what is the short-run equilibrium level of output in this economy?

Question

Quizplus · Accepted Answer

The short-run equilibrium level of output is where planned aggregate expenditure equals actual aggregate expenditure. In this case, PAE = 1,000 + 0.5Y, so the equilibrium level of output is where 1,000 + 0.5Y = Y. Solving for Y, we get Y = 2,000.

If Planned Aggregate Expenditure in an Economy Can Be Written