What is the aggregate expenditures function?

Q: Analyse how the level and pattern of household spending may change when GDP decreases

A: Gross Domestic Product (GDP) is the value of final goods and services produced in the domestic…

Q: Why can’t an economy with an MPC greater than 1 reach a stable equilibrium in the aggregate…

A: The marginal propensity to consume refers to the increase in consumption expenditure with an…

Q: What is the effect on aggregate expenditure if the value of exports exceeds the value of imports in…

A: Aggregate expenditure is the expenditure which all the factors undertake during a specific period of…

Q: Calculate MPS if we know that MPC Is 0.67

A: The information given is the value of Marginal propensity to Consume which is:- 0.67 We have to find…

Q: Which of the following would not increase autonomous consumption spending? Select an answer and…

A: Disposable income refers to the income that is received by the consumer after the payment of tax. If…

Q: The diagram below is a representation of the aggregate expenditure model in a hypothetical economy.…

A: It is given that the initial GDP is 112 millions from the diagram. The given change in aggregate…

Q: If the MPC is 0.9 what will happen to GDP if the government cut spending bt S2.

A: Given data: MPC, c=0.9Government spending, G=$2

Q: The government of a country decides to double its current level of spending, causing real GDP to…

A: Gross domestic product (GDP): - GDP is the market value of all final goods and services produced in…

Q: A recessionary expenditure gap

A: There are two types of gap, depicts different situation: Inflationary gap and…

Q: How does the MPC differ from the MPS?

A: Meaning of Marginal Propensity to Consume (MPC): The term marginal propensity to consume refers to…

Q: If the economy is net importer, what will that do to the aggregate expenditure function and…

A: The change in aggregate expenditure function and the equilibrium level of real GDP when economy is…

Q: Explain carefully: “A change in the price level shifts the aggregate expenditures curve but not the…

A: Aggregate demand is sum total of goods and services that are actually produced in the market…

Q: Given the following consumption fiction, C= 100 + 0.6YD calculate by how much induced consumption…

A: We are going to find the change in consumption spending to answer this question.

Q: What is the primary component(s) of GDP that Fiscal Policy is trying to effect?

A: Fiscal Policy refers to the change in government spending or taxes in order to promote economic…

Q: What is the effect on aggregate expenditure if the values of exports exceeds the value of imports in…

A: Answer: Introduction: Aggregate expenditure: it refers to the sum of consumer spending (C), producer…

Q: Why do economic booms and recessions tend to be transmitted across national borders? Explain your…

A: In a recession, the incomes and economic activity in a nation decline along with the real GDP. On…

Q: What are MPC and MPS?

A: Marginal propensity to consume refers to the percentage of additional income spent on consumption.…

Q: Expenditures that would exist at a zero level of income are called induced expenditures:  True or…

A: There are two types of expenditure : Induced expenditure and Autonomous expenditure  Induced…

Q: What is the level of aggregate expen level of income? Graph the aggregate expenditures function.

A: Aggregate expenditure is the sum of consumption, investment, government spending, and net exports.…

Q: If planned expenditures are below actual production, what will happen to income?  Explain the…

A: If planned expenditure is below than the actual production, then the income will decrease. Because,…

Q: You are given the following information about a closed economy with no government: Consumption = 115…

A: Meaning of Effective Demand Function: Effective demand refers to the aggregate demand in an…

Q: c. What is the MPI? d. What is the level of aggregate expenditures at each level of income? e. Graph…

A: The national income and the aggregate expenditure form a relationship and can be witnessed on the…

Q: Why is investment spending unstable?

A: The investment is the process of spending the money for making more returns from the fir or process…

Q: What is the minimum value of multiplier?

A: The multiplier is given by the formula:- k = 1 / ( 1 - MPC ) Where MPC is the marginal propensity to…

Q: the consumption schedule shows

A: The consumption schedule shows the relationship between consumption and level of disposable income.…

Q: Give an example of a change in autonomous spending that took place during 2000-2010.

A: The financial crisis between 2000-2010 was spread in economy at large scale. The amount of spending…

Q: What is fiscal multiplier?

A: Formula for fiscal Multiplier is Fiscal Multiplier=11-MPC where MPC is marginal propensity to…

Q: You are given the following information about a closed economy with no government: Consumption = 445…

A: Given: In a closed economy, Consumption : 445+0.75Y Investment : 250

Q: if investment spending at each level of output increases by $120 billion, what will equilibrium…

A: Equilibrium Output is the amount of output in an economy where Aggregate Demand equals Aggregate…

Q: You Suppose the government increases education spending by $20 billion. If the marginal propensity…

A: Here we calculate the total spending increases by using the given information  , so the calculation…

Q: Which of the following statements is TRUE regarding the Aggregate Expenditure model?

A: Answer 33.  Aggregate Expenditure Model is referred to as a model which relates to the components of…

Q: How do households dissave?  Where do they get the money to finance their extra consumption?  Can…

A: Dissaving refers to the activity of spending more amount than what is earned.

Q: If government spending rises by £500 million in an economy where the marginal propensity to spend is…

A: Marginal Propensity to spend or consume (MPC) represent that proportion of increase in income that…

Q: Which of the following would not increase autonomous consumption spending? Select an answer and…

A: Autonomous consumption can change in response to life situations such as a move the loss or gain of…