Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 30

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 upwards?

• A) Foreign economies go into a recession and buy less domestically produced goods.
• B) Households become more present oriented and decrease the autonomous component of saving.
• C) Firms expect future profits to fall and cut investments accordingly.
• D) The government cuts spending on healthcare.

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Definitions:

Mandatory Conditions

Requirements or clauses within a contract or legal provision that are compulsory and enforceable, requiring strict adherence by all parties involved.

Equity Securities

Financial assets representing ownership interest in a company, such as stocks.

Common Shares

Equity securities that signify ownership in a corporation and entitle the holder to a vote at shareholders' meetings and to receive dividends.

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, often paid dividends before common shareholders.