Final answer:
AE = 800 + 0.95Y represents aggregate expenditure, which consists of autonomous consumption (or spending) and induced consumption, therefore the answer is B. autonomous consumption + induced consumption.
Step-by-step explanation:
The equation AE = 800 + 0.95Y refers to aggregate expenditure (AE) as a function of national income (Y). To identify what AE equals to in the provided answer choices, we should analyze the components of AE which include consumption (C), investment (I), government spending (G), exports (X), and imports (M). The general form of the aggregate expenditure function is AE = C + I + G + X - M.
In the given equation, the term 800 represents autonomous spending that does not depend on the level of national income, such as autonomous consumption, investment, government spending, and exports. The coefficient 0.95Y represents induced consumption that varies with national income. Hence, AE in this case consists of autonomous consumption (or autonomous spending) and induced consumption. Therefore, the correct answer to the question 'AE = to what?' is B. autonomous consumption + induced consumption.