Question

In an economy without government purchases, government transfers, or taxes, aggregate autonomous consumer spending is $750 billion, planned investment spending is $300 billion, and the marginal propensity to consume is 0.75. What is the expression for planned aggregate spending?

Answer 1

$1,050 billion + [(0.75) x YD]

Step-by-step explanation:

To determine the expression for planned aggregate spending we must first add consumer spending and planned investment spending = $750 billion + $300 billion = $1,050 billion. Then for the rest of the equation we must multiply the marginal propensity to consume (0.75) times disposable income.