Figure 36-7 In Figure 36-7, There Are Three Aggregate Expenditure Functions

question 216

Multiple Choice

Figure 36-7

In Figure 36-7, there are three aggregate expenditure functions ( C + I + G + X − IM ) for an open economy. Which of the following would cause a movement from C to B?

• A) A European economic expansion
• B) An appreciation of the dollar
• C) A depreciation of the dollar
• D) An increase in the money supply

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Definitions:

Central Planning

A system where economic decisions, such as the allocation of resources, are made by the government or a centralized authority.

Market System

An economic system in which market forces of supply and demand guide the production of goods and services and their distribution.

Property Rights

The theoretical and legal ownership rights assigned to the use, control, and transfer of property, which can be applied to both physical and intellectual properties.

Central Planning

An economic system where decisions regarding production and investment are embodied in a comprehensive plan formulated by a central authority, typically the government.