Answer:
expenditure = 900 + 0.80Y
correct option is c. 900
Explanation:
given data
Econland autonomous consumption Co = 700
marginal propensity to consume = 0.80
net taxes = 50
planned investment = 100
government purchases = 100
net exports = 40
to find out
The slope of the expenditure line
solution
we know equation of consumption line that is express as function C
C = a+b(Y-T) ...................1
here a is autonomus consumption and b is marginal propensity and Y is equilibrium GDP and T is taxes so
it will be
C = [700 + 0.80(Y - 50)]
and aggregate expenditure is here
aggregate expenditure = C + I + G + NX ..............................2
here I is plan investment and G is government purchases and NX is net exports so
put all value we will get here
expenditure PAE = [700 + 0.80(Y - 50)] + 100 + 100 + 40
PAE = 700 + 0.80Y - 40 + 100 + 100 + 40
PAE = 900 + 0.80Y
as slope of expenditure is marginal propensity
and we know that all are fixed except marginal propensity to consume
so correct option is c. 900
