Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 30

Multiple Choice

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. Which of the following events causes the aggregate expenditures curve to shift upwards?

• A) Foreign economies go into a recession and buy less domestically produced goods.
• B) Households become more present oriented and decrease the autonomous component of saving.
• C) Firms expect future profits to fall and cut investments accordingly.
• D) The government cuts spending on healthcare.

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Definitions:

Social Security

A government system that offers financial assistance to people in the form of retirement benefits, disability income, and other payments.

Medicare

A federal health insurance program in the United States for people aged 65 and over, as well as for some younger people with disabilities.

Payroll Deductions

Amounts subtracted from an employee's gross salary for taxes, insurance premiums, benefits, and other payroll-related charges.

Liabilities

Debts or duties a firm has towards third parties, necessitating repayment through the allocation of economic advantages over time.