Consider a Simple Economy That Is Made Up of Three

question 73

Multiple Choice

Consider a simple economy that is made up of three sectors: households, firms, and government. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment, G = Government Purchases. Further, I_P and G are autonomous.
JIn this case, the slope of the aggregate expenditures curve is

• A) 1.
• B) infinity (since the AE curve is horizontal).
• C) equal to the marginal propensity to consume.
• D) the value of the multiplier.

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Definitions:

Modus Tollens (MT)

A logical argument form where the denial of the consequent leads to the denial of the antecedent, often structured as "If P, then Q. Not Q, therefore not P."

Disjunctive Syllogism (DS)

A form of logical argument where, from two disjunct statements, the denial of one leads to the affirmation of the other.

Constructive Dilemma (CD)

A form of argument where, given premises that jointly imply two conclusions, if one of them is true, then so is the other.

Atomic Sentences

Simple statements in logic that contain no logical connectives or quantifiers, expressing a basic claim.