Multiple Choice
Let AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment,
G = Government Purchases.Consider a simple aggregate expenditures model, where
AE = C + IP + G and all components of aggregate expenditures except consumption are autonomous.In this model, the slope of the AE curve is the ___ and the multiplier is _____.
A) MPC; 1 ÷ (1 - MPC) where MPC = marginal propensity to consume
B) MPC; 1 ÷ MPC
C) multiplier; 1 ÷ MPS where MPS = marginal propensity to save
D) MPC; ?AE ÷ ?Y where Y = real GDP
Correct Answer:
Verified
Correct Answer:
Verified
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