In a simplified model of a closed economy with no government sector, the consumption function is described by the equation C = 200 + 0.75Y, where C is total consumption and Y is total income. Planned investment (I) is fixed at 150. Based on this information, what is the total level of spending that would occur if national income were zero?

Components of Autonomous Spending

Analyzing Shifts in Autonomous Demand

In a simplified economic model where total planned spending is determined by consumption and investment, which of the following events would cause a change in the portion of total spending that is independent of the current level of national income?

In a simplified economic model where total planned spending consists of consumption and investment, a decrease in the marginal propensity to consume will lead to a decrease in the level of autonomous demand.

In a closed economy with no government, the aggregate demand function is given by the equation AD = 350 + 0.6Y. In this model, the value of autonomous demand is ____.

In a simplified economic model, a portion of total spending is determined by factors other than the current level of national income. This spending consists of autonomous consumption (spending not dependent on income) and planned investment. Match each economic event described below with its most direct impact on this type of spending.

The Role of Autonomous Spending in Economic Models

In a simplified economic model, the aggregate demand function is initially given by AD = 500 + 0.8Y. If a widespread decrease in consumer confidence causes the portion of spending that is independent of income to fall by 50, what will be the new aggregate demand function?

Deconstructing Changes in Income-Independent Spending