Example Suppose, in Canada, MPC = 0.8, t = 0.25, and m = 0.35, Desired investment is 50, Autonomous consumption is 60, Government Purchases is 40, Export is 30. Setup the desired Aggregate Expenditure (AE) function and draw the function with a 45-degree line. Find equilibrium nation Income
Suppose the net tax rate decreases to 0.15. How does this affect the AE curve and equilibrium national income? Show this on your graph.
