If the aggregate expenditure line shows, for a given price level, how planned spending relates to the level of real GDP in the economy, then which of the following is true?
a. The quantity of real GDP demanded is found where aggregate spending equals real GDP.
b. The quantity of real GDP demanded is found where the consumption function crosses the 45 degree line.
c. The quantity of real GDP demanded is found where intended inventory investment equals government spending.
d. The quantity of real GDP demanded is found where intended inventory investment equals to zero.
a
You might also like to view...
To maximize its profit, in the short run a perfectly competitive firm decides
A) what price to charge for its product. B) what quantity of output to produce. C) whether to exit the market. D) whether to increase the size of its plant. E) how much advertising it should undertake.
When two variables move in opposite directions, they are said to be:
A) uncorrelated. B) positively correlated. C) negatively correlated. D) directionally correlated.
Economists would classify all of the following as "land," except:
A. Two thousand acres of virgin forest B. A hydroelectric dam C. Crude oil reserves D. Iron ore deposits
Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A. consumption spending increases. B. investment decreases. C. imports increase. D. exports decrease.