The expenditure line in the Keynesian cross diagram represents the:
A. equilibrium condition that Y = Y*.
B. relationship between consumption and after-tax disposable income.
C. relationship between planned expenditure and output.
D. equilibrium condition that Y = PAE.
Answer: C
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A flat tax which does allow deductions for investment spending is a type of
A) investment tax. B) excise tax. C) luxury tax. D) consumption tax.
An economy is judged efficient if
A. it is good at producing what people want. B. it produces things that people may not want but in the least wasteful way. C. produces whatever people want in a way that may not be the least wasteful. D. it is a free-market economy and not a command market.
If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
a. increase by more than $1,000. b. increase by exactly $1,000. c. increase by less than $1,000. d. decrease by an indeterminate amount.
The slope of the total production curve becomes:
A. steeper when marginal product increases, typically at low levels of input. B. steeper when marginal product decreases, typically at high levels of input. C. flatter when marginal product increases, typically at high levels of input. D. flatter when marginal product decreases, typically at low levels of input.