Consider a Simple Macro Model with a Constant Price Level

question 83

Multiple Choice

Consider a simple macro model with a constant price level and demand-determined output.The inclusion of government in such a model affects desired aggregate expenditure directly through ________ and indirectly through ________.

• A)the net taxes; the government purchases of goods and services
• B)the net taxes; its affect on disposable income
• C)the government purchases of goods and services; its effect on net exports
• D)the government purchases of goods and services; its effect on disposable income
• E)the government purchases of goods and services; its effect on investment

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Definitions:

Darwin

Charles Darwin, a British naturalist who is best known for his contributions to the science of evolution and the theory of natural selection.

Empirical Approach

A method of inquiry that relies on direct observation, experimentation, and evidence-based understanding to gain knowledge and facts.

Observation

The act of closely monitoring or examining something or someone to gain information or understanding.

Experimentation

The methodical testing of theories or hypotheses by manipulating variables to observe their effects.