The Key Idea of the Aggregate Expenditure Model Is That

question 85

Multiple Choice

The key idea of the aggregate expenditure model is that in any particular year,the level of GDP is determined mainly by

• A)investment spending.
• B)export spending.
• C)government spending.
• D)the level of aggregate expenditure.

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Definitions:

Binding Price Floor

A legally established minimum price above the equilibrium price, causing a surplus in the market.

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, utilizing both fuel and electricity.

Consumer Surplus

The gap between what consumers are prepared to pay for a good or service and what they actually do pay.

Binding Price Floor

A minimum price set by the government for certain goods and services that is above the equilibrium price, causing a surplus.