When Autonomous Expenditure Increases, Equilibrium Aggregate Expenditure

question 55

Multiple Choice

When autonomous expenditure increases, equilibrium aggregate expenditure

• A) decreases by an equal amount.
• B) increases by an equal amount.
• C) decreases by a greater amount due to the multiplier.
• D) increases by a greater amount due to the multiplier.

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Definitions:

Final Products

Goods and services that have completed the production process and are intended for final consumption or investment.

Value Added Approach

This is a method for calculating GDP that sums the values added at each stage of production, avoiding the double-counting of intermediate goods.

Calculating GDP

The process of estimating the total monetary value of all finished goods and services produced within a country's borders in a specific time period.

Double Counting

The mistake of counting the same item or transaction more than once when calculating economic indicators, leading to inaccuracies.