Suppose you are given the following information for an economy without government spending, exports, or imports. \(C\) is desired consumption, \(I\) is desired investment, and \(Y\) is income. \(C\) and \(I\) are given by

a. What is the equation for the aggregate expenditure \((A E)\) function?

b. Applying the equilibrium condition that \(Y=A E\), determine the level of equilibrium national income.

c. Using your answer from part (b), determine the values of consumption, saving, and investment when the economy is in equilibrium.

Transcribed Image Text:

C 1400+ 0.8Y 1 = 400