In Most Derivations of the Aggregate Expenditures Model, Investment Is

question 46

Multiple Choice

In most derivations of the aggregate expenditures model, investment is assumed to be independent of real GDP.What would be the effect on the aggregate expenditures (AE) function if investment spending were positively related to income?

• A)The intercept of the AE function would rise.
• B)The slope of the AE function would become flatter.
• C)Both the slope and the intercept of the AE function would increase.
• D)The slope of the AE function would become steeper.
• E)The intercept of the AE function would increase, and its slope would become flatter.

---

Definitions:

Protest Movements

Collective efforts of individuals or groups to express opposition to, or demand changes in, political, social, economic, or environmental issues.

National Industrial Recovery Act

A 1933 U.S. law aimed at boosting economic recovery during the Great Depression, which sought to encourage industrial growth and improve labor conditions.

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States during the 1930s.

Great Depression

A severe worldwide economic depression that took place mostly during the 1930s, starting in the United States.