The Aggregate Expenditures Model Is Built Upon Which of the Following

question 52

Multiple Choice

The aggregate expenditures model is built upon which of the following assumptions?

• A) Prices are fixed.
• B) The economy is at full employment.
• C) Prices are fully flexible.
• D) Government spending policy has no ability to affect the level of output.

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Definitions:

Arbitrage

The simultaneous purchase and sale of an asset in different markets to exploit price differences for a risk-free profit.

Treasury STRIPS

Separate Trading of Registered Interest and Principal of Securities; bonds that are dissected into individual principal and interest payments and sold separately.

Treasury Bond

A long-term government debt security with a fixed interest rate and maturity of more than ten years.

Treasury Bond

Long-term, fixed interest government debt securities with a maturity of more than ten years.