Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,a Decrease in Firms' Expectations of in Firms

question 199

Multiple Choice

Figure 15-1

-Refer to Figure 15-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending would be represented by a movement from

• A) AD₁ to AD₂.
• B) AD₂ to AD₁.
• C) point A to point B.
• D) point B to point A.

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Definitions:

45-Degree Line

In economics, a graphical representation used in Keynesian cross diagrams, where the line represents points where aggregate expenditure equals national income.

APC

The average propensity to consume, which is the ratio of consumption spending to disposable income.

Dissaving

Occurs when individuals withdraw funds from their savings, often due to expenditures exceeding income during a specific period.

Autonomous Consumption

The level of consumption that occurs when income is zero; it is the base level of spending that must occur even if an individual has no income.