Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 125

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
Aggregate 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.

---

Definitions:

Self-efficacy

Someone's conviction in their capability to carry out tasks needed to reach specific achievement levels.

Mastering

The process of gaining comprehensive knowledge or skill in a particular subject or activity.

Vicarious Experiences

Learning or feeling an emotion through the experiences of another person, often through stories, media, or observing others.

Encouragement

The action of giving someone support, confidence, or hope to motivate or positively influence them.