The Slope of the Aggregate Expenditures Function (AE)is Flatter Than

question 24

Multiple Choice

The slope of the aggregate expenditures function (AE) is flatter than the C+I+G function because:

• A)the marginal propensity to consume is ususally less than 1.
• B)the marginal propensity to import is greater than 1.
• C)the slope of the net exports function is negative.
• D)investment(I)and government spending(G)are assumed to be autonomous.
• E)there is a leakage from the aggregate expenditures function in the form of savings.

Evaluate the effects of changes in personal income tax rates on revenue collection from different income groups.

Interpret the relationship between government spending and its impact on the economy.

Understand the concept of transfer payments within government expenditures.

Assess the implications of demographic changes on government spending.

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Definitions:

Exporting

The act of sending goods or services to another country for sale.

Trademarks

Trademarks are distinctive signs or symbols used by businesses to identify their products or services uniquely from those of competitors, providing legal protection against infringement.

Managerial Support

The assistance and resources provided by managers to their team to achieve set objectives and improve performance.

Turnkey Project

A turnkey project is a type of project that is constructed so that it can be sold to any buyer as a completed product. This is common in international business in industries such as manufacturing and real estate.