Which of the Following Correctly Describes the Meaning of the Aggregate

question 20

Multiple Choice

Which of the following correctly describes the meaning of the aggregate expenditure (AE) function?

• A)The AE function relates the level of desired aggregate expenditure to the level of actual national income.
• B)The AE function relates the level of desired consumption expenditure to desired aggregate expenditure.
• C)The AE function relates the level of desired investment expenditure to desired aggregate expenditure.
• D)The AE function relates the level of nominal GDP to the level of real GDP.
• E)The AE function relates the level of desired aggregate expenditure to the price level.

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Definitions:

Positive Relationship

A correlation where an increase in one variable is associated with an increase in another variable.

Y-axis

The vertical axis in a coordinate plane, often used to represent values of a dependent variable in a graph.

X-axis

The horizontal axis in a graph or chart, on which values of one variable are plotted against the values of another (typically independent variable).

Slope

Slope is a measure of the steepness or incline of a line, indicating the rate at which y-values change with respect to x-values in a graph.