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Difficulty: Medium Figure 13-4

Question 117

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Difficulty: Medium Figure 13-4 Difficulty: Medium Figure 13-4 -Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I<sub>P</sub> = Planned Investment. Suppose AE = C + I<sub>P</sub>. I<sub>P</sub> is autonomous and the consumption function is C = $1,000 billion + 0.5Y. If Y= $6,000 billion, what is the value of consumption and planned investment? A) C = $3,000 billion, I<sub>P</sub> = $3,000 billion B) C = $4,000 billion, I<sub>P</sub> = $2,000 billion C) C = $5,000 billion, I<sub>P</sub> = $1,000 billion D) C = $6,000 billion, I<sub>P</sub> = zero
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption,
IP = Planned Investment. Suppose AE = C + IP. IP is autonomous and the consumption function is C = $1,000 billion + 0.5Y. If Y= $6,000 billion, what is the value of consumption and planned investment?


A) C = $3,000 billion, IP = $3,000 billion
B) C = $4,000 billion, IP = $2,000 billion
C) C = $5,000 billion, IP = $1,000 billion
D) C = $6,000 billion, IP = zero

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