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Aggregate Expenditure Problem

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5. Suppose AE = 1600 + 0.75Y. (20 marks)

(a)Draw the aggregate expenditure curve.

(b) What are the slope and the vertical axis intercept of the curve?

(c) What is the multiplier?

(d) What is the effect of $100 cut in autonomous consumption on equilibrium income? Demonstrate your answer graphically.
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