Let AE = Aggregate Expenditures, C = Consumption, I_P =

question 55

Multiple Choice

Let AE = Aggregate Expenditures, C = Consumption, I_P = Planned Investment,
G = Government Purchases. Consider a simple aggregate expenditures model, where
AE = C + I_P + G and all components of aggregate expenditures except consumption are autonomous. All other things unchanged, a decrease in the price level

• A) causes a movement up along a given aggregate expenditures curve and raises the equilibrium real GDP.
• B) shifts the aggregate expenditures curve upwards and raises the equilibrium real GDP.
• C) causes a movement down a given aggregate expenditures curve and lowers the equilibrium real GDP.
• D) shifts the aggregate expenditures curve downwards and lowers the equilibrium real GDP.

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the payer’s ledger but have not yet been cashed or cleared by the bank.

Another Company's Deposit

This refers to funds deposited by one company into the bank account of a different company, often for payment of goods, services, or a joint venture.

Another Company's Check

A form of payment issued by one company to another for goods or services rendered.

Electronic Funds Transfer

A system that allows the transfer of money between accounts via electronic signals, eliminating the need for physical checks.