If Aggregate Expenditure at a Particular Level of Income Is

question 194

Multiple Choice

If aggregate expenditure at a particular level of income is less than output,

• A) output will increase
• B) output will decrease
• C) output will remain the same
• D) output will rise slightly and then level off
• E) we cannot determine what will happen to output

---

Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Initially Consumed

Refers to the first set of goods or services that are used or consumed by an individual or entity.

Consumer's Budget Line

A graphical representation that shows all possible combinations of two goods that a consumer can purchase with a fixed budget.

Price Ratio

The relative price of one good or service compared to another, typically used in the analysis of consumer choice and budget allocation.