The expenditure line in the aggregate expenditures diagram represents the
A. relationship between expenditure and output.
B. equilibrium condition that Y = AE.
C. equilibrium condition that Y = Y*.
D. relationship between consumption and disposable income.
Answer: A
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Which one of the following describes the current state of economic development in the United States?
A) The United States is running out of natural resources, and therefore it will soon experience a drop in the rate of economic growth. B) Employment is declining in the manufacturing sector and growing in the service sector. C) Employment is declining in the manufacturing sector and growing in the agricultural sector. D) The lack of well-defined property rights in the United States means that entrepreneurs do not expect to capture the benefits of innovations they bring to the marketplace.
The higher the marginal propensity to consume, the
a. smaller the size of the multiplier. b. larger the size of the multiplier. c. larger the propensity to save. d. larger the velocity.
A perfectly competitive firm will maximize profits when
A. average cost is greater than marginal revenue. B. marginal cost is greater than marginal revenue. C. average cost is equal to average revenue. D. marginal cost is equal to marginal revenue.
Which of the following factors has been suggested as an explanation for the lack of economic growth in many poor nations?
A. a lack of dependence on the already developed nations B. the supply of human resources is too high. C. inadequate level of resources D. insufficient capital formation