The Diagram Below Shows Desired Aggregate Expenditure for a Hypothetical

Multiple Choice

The diagram below shows desired aggregate expenditure for a hypothetical economy. Assume the following features of this economy:
· marginal propensity to consume mpc) = 0.80
· net tax rate t) = 0.15
· no foreign trade
· fixed price level
· all expenditure and income figures are in billions of dollars.
FIGURE 22-3
-Refer to Figure 22-3. Which of the following equations describes the aggregate expenditure function for this economy?

A) AE = 1000 + 0.68) Y
B) AE = 1000 + 0.80) YD
C) AE = 1000 +0.80) Y + 0.15 YD
D) AE = 1975 + 0.68) Y
E) AE = 1975 +0.65) Y