Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 135

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? If government purchases increases by $200 billion, the aggregate expenditures curve will shift up by

• A)$200 billion.
• B)$200 billion xthe multiplier.
• C)$200 billion xmarginal propensity to consume.
• D)$200 billion x(1 ÷ marginal propensity to consume).

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Definitions:

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