Consider the following simplified AE function: AE = 3,000+ 0.6Y+0.25(M/P) where AE is the desired aggregate...
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Consider the following simplified AE function: AE = 3,000+ 0.6Y+0.25(M/P) where AE is the desired aggregate expenditure, Y is real GDP, M is the private sector's nominal wealth, and P is the price level. Suppose that M is constant and equal to $24,000. a. In the table below compute the private sector's real wealth (M/P) and the intercept term of the AE function for each price level. (Round your responses to the nearest whole number.) Price Level M/P 2 3 4 5 6 AE Function AE = AE = AE = AE = AE = +0.6Y +0.6Y +0.6Y +0.6Y +0.6Y Desired Aggregate Expenditure (AE) 20,000- 18,000- 16,000- 14,000- 12,000- 10,000- 8,000- 6,000- 4,000- 2,000- 0- Aggregate Expenditure Function 0 45 line 5,000 10,000 15,000 Actual Nominal Income (Y) 20,000 Q Consider the following simplified AE function: AE = 3,000+ 0.6Y+0.25(M/P) where AE is the desired aggregate expenditure, Y is real GDP, M is the private sector's nominal wealth, and P is the price level. Suppose that M is constant and equal to $24,000. a. In the table below compute the private sector's real wealth (M/P) and the intercept term of the AE function for each price level. (Round your responses to the nearest whole number.) Price Level M/P 2 3 4 5 6 AE Function AE = AE = AE = AE = AE = +0.6Y +0.6Y +0.6Y +0.6Y +0.6Y Desired Aggregate Expenditure (AE) 20,000- 18,000- 16,000- 14,000- 12,000- 10,000- 8,000- 6,000- 4,000- 2,000- 0- Aggregate Expenditure Function 0 45 line 5,000 10,000 15,000 Actual Nominal Income (Y) 20,000 Q
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