The Figure Shows Planned Aggregate Expenditure and Output for an Economy

question 102

Multiple Choice

The figure shows planned aggregate expenditure and output for an economy. Suppose that the economy starts at PAE₂. Which change would cause a move from PAE₂ to PAE₁?

• A) The wealth level increases.
• B) Interest rates increase.
• C) Taxes decrease.
• D) Domestic income decreases.

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Definitions:

Psychosexual Development

A theory proposed by Freud that suggests individuals go through five stages of personality development tied to sexual maturation.

Erogenous Zone

An erogenous zone is an area of the body that has heightened sensitivity and can produce sexual pleasure when stimulated.

Genitals

The reproductive organs, especially the external sex organs.

Humanistic Psychologist

A professional in psychology who focuses on an individual's potential and stresses the importance of growth and self-actualization.