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1. In a closed economy (no imports or exports), Aggregate Expenditure 'AE' is defined as the sum of Consumption Expenditure 'C', Investment
Expenditure 'I' and Government Expenditure 'G' or
AE = C + I + G
In equilibrium, Income 'Y' is equal to 'AE'.
If Y = $1265, C = $660, and I = $325, solve for G.
G = $_____________
2. An equation for Aggregate Expenditure is:
AE = $3600 - 0.8Y,
In equilibrium, Income 'Y' = Aggregate Expenditure 'AE'. Solve for Y.
Y = $_______________________
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