In the Aggregate Expenditures Model, an Increase in Government Spending

question 8

Multiple Choice

In the aggregate expenditures model, an increase in government spending causes a(n) :

• A) upward shift in the aggregate expenditures curve.
• B) downward shift in the aggregate expenditures curve.
• C) leftward movement along the aggregate expenditures curve.
• D) rightward movement along the aggregate expenditures curve.

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Definitions:

Perpetuity

A financial instrument that pays a fixed sum of money indefinitely, with no end date.

Deferral Period

A specified period of time during which payment of a debt, investment, or loan is suspended or delayed.

Compounded Monthly

Interest calculation method where both the initial principal and the accumulated interest are recalculated every month.

Economic Values

The monetary worth of goods, services, or resources based on their utility and their capacity to satisfy wants or needs.