Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 50

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 downwards?

• A) Firms become optimistic about future profits and increase investment spending.
• B) The government reduces property tax rates.
• C) The government cuts spending on education.
• D) Households save a greater portion of any change in disposable income.

---

Definitions:

Negative Marginal Utility

The decrease in satisfaction or usefulness obtained from consuming one more unit of a product, leading to decreased overall utility.

Candy Bars

Pre-packaged, convenient, sweet confections commonly made from chocolate and other ingredients like nuts, caramel, or nougat.

Consumer's Income

The total amount of income earned by consumers, determining their purchasing power and ability to afford goods and services.