Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 164

Multiple Choice

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. The marginal propensity to consume is ⅔. Holding all else constant, if net exports increase by $50 billion, what happens to Jaggregate demand?

• A) It shifts left by $150 billion.
• B) There is a movement down along a given aggregate demand so that aggregate quantity demanded increases by $150 billion.
• C) It shifts right by $150 billion
• D) There is a movement down along a given aggregate demand so that aggregate quantity demanded increases by $50 billion.

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Definitions:

Agricultural Contract

A contract for the future sale or purchase of agricultural products, such as crops or livestock.

Financial Future

A contract to buy or sell a specified asset at a predetermined price at a specified time in the future, often used to hedge risk or speculate.

Commodity Future

A commodity future is a legally binding agreement to buy or sell a particular commodity asset, or its monetary equivalent, at a predetermined price at a specified time in the future.

Expected Fall

The anticipated decrease in the price or value of an asset or market, often based on current trends, analyses, or market conditions.