A Key Result of the Equilibrium Aggregate Expenditure Model Is

question 127

Multiple Choice

A key result of the equilibrium aggregate expenditure model is that it:

• A) can explain why the economy should always be at natural rate GDP.
• B) illustrates how the government always moves us towards equilibrium GDP.
• C) can illustrate how an economy can be at an equilibrium that is below natural rate GDP.
• D) shows how classical notion that the economy will always tend towards natural rate GDP is correct.

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Definitions:

National Saving

The total amount of saving in a country, comprising both private and public saving.

Index Funds

Mutual funds or exchange-traded funds (ETFs) designed to follow certain preset rules so that the fund can track a specified basket of underlying investments.

Managed Mutual Funds

Programs invested in by shareholders that operate with a mix of different investments, all overseen by experienced investment professionals.

Rate of Return

The increase or decrease in the value of an investment during a particular time frame, presented as a percentage of the investment’s original price.