A Change in ________ Creates a Movement Along the Aggregate

question 233

Multiple Choice

A change in ________ creates a movement along the aggregate demand curve, while a change in ________ shifts the aggregate demand curve.

• A) expected profits; tax rates
• B) the price level; government expenditures
• C) foreign income; the foreign exchange rate
• D) real wealth; human capital

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Definitions:

Disposable Income

Discretionary income for households to utilize in their saving and spending after the enforcement of income taxes.

Consumption

Refers to the use of goods and services by households or individuals for personal needs or for leisure, as opposed to investment or savings.

Billion

A numerical value represented by 1,000 million or 10^9.

Induced Consumption

Consumer spending that varies with income, representing the portion of income that households spend on goods and services rather than saving.