-Refer to the information above to answer this question.What is the equation for aggregate expenditures?
A)AE = 4,500.
B)AE = 3,500.
C)AE = 4,500 + Y.
D)AE = 4,500 + 0.6Y.
E)AE = 11,250 + 0.6Y.

Question

-Refer to the information above to answer this question.What is the equation for aggregate expenditures?
A)AE = 4,500. 
B)AE = 3,500. 
C)AE = 4,500 + Y. 
D)AE = 4,500 + 0.6Y. 
E)AE = 11,250 + 0.6Y.

Quizplus · Accepted Answer

The equation for aggregate expenditures (AE) typically includes autonomous spending (which does not depend on income) and induced spending (which is a function of income, Y). The correct equation, AE = 4,500 + 0.6Y, combines autonomous spending (4,500) with induced spending that is dependent on income (0.6Y).

-Refer to the Information Above to Answer This Question