The Aggregate Expenditure Curve Shows

question 192

Multiple Choice

The aggregate expenditure curve shows

• A) how planned aggregate expenditure and real GDP are related.
• B) a negative relationship between the price level and real GDP.
• C) how consumption changes in response to a change in disposable income.
• D) Both answers B and C are correct.

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Definitions:

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Bubble

An increase in the price of a good based not on the fundamentals of demand or value, but instead on a belief that the price will keep going up.

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The study of how individuals or groups select, buy, use, and dispose of goods, services, ideas, or experiences.

Rules of Thumb

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