Final answer:
The Y-intercept in the given equation represents autonomous consumption. The Y-intercept of the equation AE = 800 + .95 Y is at autonomous consumption, where the value is $800.
Step-by-step explanation:
The Y-intercept in the equation AE = 800 + .95Y represents the autonomous consumption. Autonomous consumption refers to the level of consumption that occurs even when income is zero. In this equation, when income (Y) is zero, the equation reduces to AE = 800, indicating that the autonomous consumption is 800.
The Y-intercept of the equation AE = 800 + .95 Y is at autonomous consumption, where the value is $800.
The given equation AE = 800 + .95 Y where AE stands for Aggregate Expenditure and Y stands for National income, helps us to identify the level of autonomous consumption, which is a component of total consumption that does not depend on current income. The Y-intercept of an equation in this form represents the point where Y is zero. In this context, the Y-intercept occurs at autonomous consumption which is $800 in this particular equation. This is because at a point where national income (Y) is zero, AE solely consists of autonomous consumption. Meanwhile, induced consumption would depend on the level of income and is represented by the .95Y part of the equation. The equilibrium level cannot be determined by the Y-intercept alone since it requires setting AE equal to national income Y and solving for Y. The Y-intercept in the equation AE = 800 + .95Y represents the autonomous consumption. Autonomous consumption refers to the level of consumption that occurs even when income is zero. In this equation, when income (Y) is zero, the equation reduces to AE = 800, indicating that the autonomous consumption is 800.
The Y-intercept of the equation AE = 800 + .95 Y is at autonomous consumption, where the value is $800.