Suppose the Slope of the Aggregate Expenditures Curve Is 0

question 143

Multiple Choice

Suppose the slope of the aggregate expenditures curve is 0.75. An increase in autonomous investment expenditure of $6 billion would produce an ultimate increase in equilibrium real GDP of

• A) $0.25 billion.
• B) $6 billion.
• C) $12 billion.
• D) $24 billion.

Recognize the effects of economies of scale, constant returns to scale, and diseconomies of scale.

Identify the role of specialization and diminishing returns in production.

Interpret representations of production functions and their implications on costs and output.

Distinguish between the short run and long run in production planning.