Question

Find a numerical equation relating planned aggregate expenditure to output and to the real interest rate. [i.e. write down the PAE equation]

Answer 1

Answer:

The answer is below

Explanation:

Aggregate expenditure is the current value of finished products in an economy, it is gotten by summing all expenditures spent over a period of time in an economy. It is given by the formula:

PAE = $C^d+I^p+G+X$

Where PAE is the planned aggregated demand, C is the household consumption, X is the difference between exports and imports, I is the investments while G is government expenditures