FIGURE 21-3 Refer to Figure 21-3

question 136

Multiple Choice

FIGURE 21-3 Refer to Figure 21-3.A shift in the aggregate expenditure function from AE₀ to AE₁ could be caused by

• A)a rise in the multiplier.
• B)a fall in the marginal propensity to consume.
• C)a rise in the marginal propensity to consume.
• D)an increase in desired investment expenditures.
• E)a decrease in desired investment expenditures.

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Definitions:

Cross-price Elasticity

A measure of how the demand for one good responds to a change in the price of another good, indicating substitutes or complements.

Complements

Goods or services that are used together, such that an increase in demand for one leads to an increase in demand for the other.

Price Decrease

A decline in the cost of a good or service in the market.

Lobster Consumption

The amount of lobster that is consumed by individuals or populations within a certain timeframe.