In the table below is data for a hypothetical private-closed economy (The table normally goes here) Recall, private means that there is no government and closed means that there is no foreign trade. Use the information in the Table 1 to analyze aggregate expenditures (AE) model below (Figure 1. Equilibrium in a Private Closed Economy). Figure 1. Equilibrium in a Private Closed Economy (The line graph normally goes here) 1.3. Identify the mistake and explain why the graph of the aggregate expenditures line does not correctly illustrate the economy's equilibrium. 1.4. Chart the aggregate expenditures (AE) model using the data from Table 1: A Private Closed Economy. Hints: Remember, the 45d
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1.2. In the table below is data for a hypothetical private-closed economy (The table normally goes here)
Recall, private means that there is no government and closed means that there is no foreign trade.
Use the information in the Table 1 to analyze aggregate expenditures (AE) model below (Figure 1. Equilibrium in a Private Closed Economy).
Figure 1. Equilibrium in a Private Closed Economy (The line graph normally goes here)
1.3. Identify the mistake and explain why the graph of the aggregate expenditures line does not correctly illustrate the economy's equilibrium.
1.4. Chart the aggregate expenditures (AE) model using the data from Table 1: A Private Closed Economy.
Hints:
Remember, the 45degree line (also known as the Keynesian Cross) is a tool that shows how differences in aggregate expenditures and real
So, the equations for the two are identical:
Y = C + I + G + NX, and AE (aggregate expenditure) = C + I + G + NX
For private closed economy the equation is:
Y = C + I , and AE (aggregate expenditure) = C + I
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