Question: Suppose that we have a Desired Aggregate Expenditure Function (AEF) given by the following: AEF = a + bY 6. What is this economy's

Suppose that we have a Desired Aggregate Expenditure Function (AEF) given by

Suppose that we have a Desired Aggregate Expenditure Function (AEF) given by the following: AEF = a + bY 6. What is this economy's Equilibrium National Income (Y) as a function of a & b? [2 points] Now suppose that we know that the Marginal Propensity to Consume was equal to 80%, the Marginal Propensity to Import was 10%, and the government's tax rate was equal to 20%. 7. What is the slope of this AEF? [2 points] Suppose that there is an increase in autonomous Investment (1) by $900. 8. How would this increase in autonomous investment affect equilibrium national income (Y)? [2 points] 9. Suppose that the government increase the tax rate from 20% to 40%, how much would this increase or decrease the Simple Multiplier by? [3 points]

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