Asked by
MABEL GAHAN (STUDENT)
on Nov 11, 2024
Verified
Assume an economy is in equilibrium at a real GDP of $5 trillion.If aggregate expenditure (AE) increases by $1 trillion,the economy's equilibrium real GDP is likely to _____.
A) increase by $1 trillion
B) increase by more than $1 trillion
C) increase by less than $1 trillion
D) decrease by $1 trillion
E) decrease by more than $1 trillion
Aggregate Expenditure
Aggregate expenditure is the total amount of spending in an economy, including consumer spending, investment, government spending, and net exports.
Equilibrium Real GDP
The level of gross domestic product where aggregate supply equals aggregate demand at current prices, adjusted for inflation.
- Understand the impact of variations in independent investment on economic equilibrium and the principle of the spending multiplier.
- Comprehend the role of the price level in defining the aggregate demand and expenditure in an economy.
Verified Answer
MS
Learning Objectives
- Understand the impact of variations in independent investment on economic equilibrium and the principle of the spending multiplier.
- Comprehend the role of the price level in defining the aggregate demand and expenditure in an economy.