Consider two economies (1 and 2) where in equilibrium, the level of aggregate income (Y) is the sum of aggregate investment expenditure (I) and aggregate consumption expenditure (C). I is determined autonomously of Y and its value in economy 1 is double that in economy 2. If the marginal propensity to save in economy 1 is half that in economy 2 for all values of Y, then the equilibrium value of Y – C in economy 1 is A. double that in economy 2 B. half that in economy 2 C. the same as that in economy 2 D. None of the above

Consider two economies (1 and 2) where in equilibrium, the level of aggregate income (Y) is the sum of aggregate investment expenditure (I) and aggregate consumption expenditure (C). I is determined autonomously of Y and its value in economy 1 is double that in economy 2. If the marginal propensity to save in economy 1 is half that in economy 2 for all values of Y, then the equilibrium value of Y – C in economy 1 is A. double that in economy 2 B. half that in economy 2 C. the same as that in economy 2 D. None of the above

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.3P

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