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The Figure Shows Planned Aggregate Expenditure and Output for an Economy

question 117

Multiple Choice

The figure shows planned aggregate expenditure and output for an economy. The figure shows planned aggregate expenditure and output for an economy.   Suppose that the economy starts at PAE<sub>2</sub>. Which change would shift the PAE curve upward? A)  An increase in wealth. B)  An increase in interest rates. C)  And increase in taxes. D)  An increase in imports. Suppose that the economy starts at PAE2. Which change would shift the PAE curve upward?


Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles of goods based on the level of satisfaction or utility those goods provide.

Indifference Curve

A graphical representation showing combinations of goods or services among which a consumer is indifferent, depicting preferences for consumption bundles.

Apples

Edible fruits produced by an apple tree, known scientifically as Malus domestica, and popular worldwide for their sweet taste and nutritional benefits.

Bananas

A popular fruit that is long and curved with a soft flesh covered by a yellow peel when ripe.

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