Which of the following would lead to a rightward movement along the aggregate expenditure line rather than a shift of the line itself?
a. A reduction of the marginal propensity to consume
b. A decrease in income of $100 billion
c. An increase in income of $50 billion
d. An increase in the interest rate
e. A $50 billion decrease in autonomous consumption spending
C
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A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents
A) a tradeoff. B) a free lunch. C) full employment of labor but not capital. D) unemployment of labor but not capital. E) an infinite opportunity cost.
If the same dairy can produce either whole milk or skim milk, an increase in the profitability of whole milk results in a(n)
a. decrease in the quantity supplied of whole milk b. increase in the supply of whole milk c. decrease in the supply of skim milk d. increase in the supply of skim milk e. decrease in the quantity supplied of skim milk
Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
a. increase. b. remain unchanged. c. decrease by less than 20 percent. d. decrease by more than 20 percent.
The "fiscal multiplier" is the ripple effect of subsequent:
A. increases in spending following an initial increase in government spending. B. increase rate changes following a change to the federal funds rate. C. increases in lending following an initial increase in bank reserves. D. private-sector layoffs following an initial layoff in the public sector.