The Aggregate Expenditure Model Predicts a Business Cycle Expansion Occurs

question 249

Multiple Choice

The aggregate expenditure model predicts a business cycle expansion occurs when

• A) autonomous expenditure increases.
• B) aggregate supply increases.
• C) potential GDP increases.
• D) induced expenditure decreases.
• E) the aggregate planned expenditure curve shifts downward.

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Definitions:

Budget Constraint

A representation of all the combinations of goods and services that a consumer can afford to buy at given prices within their income level.

Apples

A type of fruit that is cultivated worldwide and comes in various colors, including red, green, and yellow, known for its crisp texture and sweet to tart flavor.

Bananas

A common fruit known for its elongated shape and soft, starchy interior, often consumed as a snack or used in cooking.

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods according to the levels of satisfaction they provide.