On the aggregate expenditure model, the 45-degree line showsGroup of answer choicesThe amount of autonomous expenditureThe amount of outputPoints where output exceeds expenditurePoints where output equal expenditure
Question
On the aggregate expenditure model, the 45-degree line showsGroup of answer choicesThe amount of autonomous expenditureThe amount of outputPoints where output exceeds expenditurePoints where output equal expenditure
Solution
In the aggregate expenditure model, the 45-degree line shows points where output equals expenditure. This line represents all the points where the total amount of goods produced (output) is equal to the total amount of goods purchased (expenditure). This is because the 45-degree line has a slope of 1, meaning that for every unit increase in output, there is an equal unit increase in expenditure.
Similar Questions
In the aggregate demand–output model, if aggregate demand is less than GDP, then:Group of answer choicesGDP decreases.inventory is depleted.inventory is unchanged.employment increases.
If planned aggregate expenditure (PAE) in an economy equals 2000 + 0.8Y and potential output (Y*) equals 9000, then this economy has:Group of answer choicesa recessionary gap.No output gap.no autonomous expenditure.an expansionary gap.no induced expenditure.
The aggregate demand curve illustrates the relationship between ________ and the ________, holding constant all other factors that affect aggregate expenditure. a. The price level; quantity of consumption expenditure. b. The interest rate; quantity of planned aggregate expenditure. c. The price level; quantity of planned investment expenditure. d. The price level; quantity of planned aggregate expenditure.
Use the figure to answer the question. The income expenditure multiplier equalsGroup of answer choices0.5624
Census of Expenditure Method
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