In a Simple Economy in Which Prices Are Constant and with No

question 428

Multiple Choice

In a simple economy in which prices are constant and with no income taxes or imports, the slope of the AE curve is 0.8. In order to increase real GDP by $500 billion, then

• A) saving needs to be reduced by $500 billion will lead to the increase of $500 billion.
• B) an increase in investment of $200 billion will lead to the increase of $500 billion.
• C) consumption expenditure needs to increase by $500 billion.
• D) an increase in autonomous expenditure of $100 billion will lead to the increase of $500 billion.

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Definitions:

Depreciated

The process of allocating the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Straight-Line

A technique for computing depreciation or amortization that involves uniformly distributing an asset's cost across its lifespan.

Assets

Resources owned by a person or entity that are expected to provide future economic benefits.

Depreciation Expense

An accounting method that allocates the cost of tangible asset over its useful life, reflecting how the asset loses value over time.