In most derivations of the aggregate expenditures model, investment is assumed to be independent of real GDP. What would be the effect on the aggregate expenditures (AE) function if investment spending were positively related to income?
a. The intercept of the AE function would rise.
b. The slope of the AE function would become flatter.
c. Both the slope and the intercept of the AE function would increase.
d. The slope of the AE function would become steeper.
e. The intercept of the AE function would increase, and its slope would become flatter.
d
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If the marginal social cost of a good equals the marginal private cost of the good, then the marginal external cost of the good
A) is zero. B) equals the marginal social cost. C) equals the marginal social benefit. D) equals the marginal private benefit.
The endogenous variable in the aggregate supply curve is ________
A) output B) the real interest rate C) inflation D) planned expenditure E) none of the above
Refer to Figure 12.2. How many Nash equilibriums are there?
A. 0
B. 1
C. 2
D. 3
Exchange by barter requires a coincidence of wants.
Answer the following statement true (T) or false (F)