If Government Purchases Increase, the Expenditure Line

question 145

Multiple Choice

If government purchases increase, the expenditure line

• A)will shift up and the AD curve will shift to the left.
• B)will shift up and the AD curve will shift to the right.
• C)will not shift and the AD curve will shift to the right.
• D)will shift up and there will be an upward movement along the AD curve.
• E)will shift up and there will be a downward movement along the AD curve.

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Definitions:

Classical Decision Theory

A framework in managerial economics that outlines how decisions should be made, considering variables and outcomes in a rational and structured manner.

Satisfactory Alternative

An acceptable option or solution that meets basic requirements or needs, though it may not be the optimal choice.

Behavioural Decision Model

Decision-making with limited information and bounded rationality.

Rational

Based on or in accordance with reason or logic; a way of thinking or decision-making that is logical and based on facts and evidence.