Description
The Aggregate Expenditure Model –
Please answers to the following questions In much details as possible and give examples when needed. You can use “ exploring Microeconomics by Robert L. Sexton seventh edition as reference. I will be using the links in order to complete this assignment. PowerPoint slides link
1. Describe the marginal propensity to consume and show how it is computed.
2. Discuss how spending and output influences equilibrium in a simple model where aggregate expenditure = consumption.
3. Describe how unplanned inventory can influence equilibrium in the model where AE=(C+I+G+(X-M))
4. Briefly describe the expenditure multiplier and state how it is computed. How is it different from the Tax multiplier?
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