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.

---

Definitions:

Additional Cost

Expenses or charges that may be incurred beyond the initial purchase price or cost projections.

Incremental Overhead

Additional overhead costs that arise from new activities or an increase in production beyond normal operations.

Variable Costs

Costs that vary directly with the level of production or the volume of services provided.

Special Order

An order for goods or services that is outside the company's normal scope of products or services, often requiring special pricing or terms.