When Compared to a Simple Macroeconomic Model (With Only Consumption

question 19

Multiple Choice

When compared to a simple macroeconomic model (with only consumption and investment) ,adding government and foreign trade to the AE function causes

• A)the autonomous component of AE to increase.
• B)the autonomous component of AE to fall.
• C)the AE function to become downward sloping.
• D)the AE function to become perfectly horizontal.
• E)no change in the AE function.

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Definitions:

Federalism

A system of government where power is divided between a central authority and constituent political units, such as states or provinces.

Dual Federalism

A concept of federalism where federal and state governments are seen as co-equal sovereigns, operating independently and with powers that are clearly delineated.

Layer Cake

Often used as a metaphor to describe a clear, well-defined separation of powers or responsibilities, especially in federal systems.

Marble Cake

Metaphorically used in federalism to describe a government system where state, local, and federal powers are intertwined and not clearly distinguished.