The most basic premise of the aggregate expenditures model is that the
A. unemployment level in the economy is inversely related to the inflation rate.
B. total output produced in the economy depends directly on the level of total spending.
C. level of employment in the economy depends inversely on the real wage rate.
D. total output produced depends mostly on the total capacity of firms to produce.
Answer: B
You might also like to view...
Sovereign debt crises are triggered ________
A) by innovations in subprime real estate markets B) when a country's debt-to-GDP ratio becomes excessively high C) when austerity measures cause a sharp fall in the supply of government bonds D) by the adoption of a common currency, such as the euro
Which of the following would most likely be considered complements?
A) butter and margarine B) rental cars and taxis C) plastic wrap and aluminum foil D) tennis rackets and tennis balls
If the exchange rate changes from $2.00 = £1 to $2.01 = £1 then
A) the dollar has depreciated. B) the dollar has appreciated. C) the British pound has depreciated. D) the British pound has stayed constant in value.
Refer to the information provided in Figure 24.4 below to answer the question(s) that follow.
Figure 24.4Refer to Figure 24.4. Along aggregate expenditure AE1, the MPC is
A. 0.6. B. 0.7. C. 0.8. D. 0.9.