The Expenditure Multiplier Concept of the Aggregate Expenditures Model

question 63

Multiple Choice

The expenditure multiplier concept of the aggregate expenditures model

• A)is not at all relevant in the AD-AS model.
• B)magnifies the shifts of the aggregate demand curve.
• C)explains movement up or down the aggregate demand curve.
• D)reverses the shift of the aggregate demand curve.

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Definitions:

Consumption

The process by which goods and services are used up or utilized by individuals or communities.

Utility Function

An equation depicting how consumer preferences among various good combinations lead to differing levels of consumer happiness or utility.

Leisure

Time spent away from work and essential daily tasks, used for relaxation, hobbies, and personal enjoyment.

Consumption

The act of using goods and services to satisfy needs and wants, including the purchase and use of commodities by individuals and households.