When Real Output Decreases, Planned Aggregate Expenditures Decrease Because

question 114

Multiple Choice

When real output decreases, planned aggregate expenditures decrease because:

• A)autonomous expenditures increase.
• B)autonomous expenditures decrease.
• C)induced expenditures increase.
• D)induced expenditures decrease.

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Definitions:

Capital Budgeting Committee

A group within an organization responsible for evaluating and making decisions about long-term investment projects and capital expenditures.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Sunk Cost

Expenses that have already been incurred and cannot be recovered, and should not affect future business decisions.