Question

An equation for aggregate expenditure is: ae = $3600 0.8y, in equilibrium, income 'y' = aggregate expenditure 'ae'. solve for y.

Answer 1

In equilibrium, aggregate expenditure (AE) is equal to national income (Y). The equilibrium income can be calculated by setting the given equation for aggregate expenditure equal to y and solving for y, which results in y = $2000.

Step-by-step explanation:

In equilibrium, aggregate expenditure (AE) is equal to national income (Y). The given equation for aggregate expenditure is ae = $3600 - 0.8y. To find the equilibrium, we set ae equal to y and solve for y.

Therefore, we have: y = $3600 - 0.8y

To solve for y, we can rearrange the equation as follows: 1.8y = $3600

Dividing both sides by 1.8 gives us: y = $3600/1.8 = $2000

Therefore, the equilibrium income (y) is $2000.

Answer 2

Answer: $2000

Explanation: Aggregate expenditure is best defined as a measure of national income. It is employed in determining the total value of economic activities in the nation which is also known as the Gross domestic product (GDP) of that nation (measure of the economic production of a nation in financial capital terms over a specific period of time). In addition to this, it determines in entirety the total amount that companies and households apportion to spend on goods and services at every level of income.

If at equilibrium Y = AE,

Where AE = $3600 - 0.8Y,

Then Y = $3600 - 0.8Y

Collecting like terms together,

Y + 0.8 Y = $3600

1.8 Y = $3600

Y = $3600/1.8 = $2000.