Which of the Following Would Lead to a Rightward Movement

question 74

Multiple Choice

Which of the following would lead to a rightward movement along the aggregate expenditure line rather than a shift of the line itself?

• A) A reduction of the marginal propensity to consume
• B) A decrease in income of $100 billion
• C) An increase in income of $50 billion
• D) An increase in the interest rate
• E) A $50 billion decrease in autonomous consumption spending.

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than its trade partners.

Heckscher-Ohlin Theorem

A theory that explains the existence of a country’s comparative advantage by its factor endowments: A country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product.

Resource Allocation

The process of assigning and managing assets in a manner that supports an organization's strategic goals.

Resource Constraints

Limitations on the availability of resources, which can restrict output, growth, and efficiency.