Aggregate Expenditure, Demand and Supply

Front

In the consumption function: C = a + bYD, what does a stand for?

Back

autonomous consumption

Front

Which would shift the consumption schedule upward? Consumer expectations of falling prices, Consumer expectations of product surpluses, A decrease in wealth, An increase in wealth

Back

An increase in wealth

Front

If real interest rate increases:

Back

the level of investment spending will decrease.

Front

Comparing the expected economic profit (total revenue minus total cost) to cost of investment is called

Back

expected rate of return

Front

The multiplier effect means that:

Back

an increase in investment can cause GDP to change by a larger amount.

Front

A private closed economy includes: households and businesses, but not government or international trade.

Back

households and businesses, but not government or international trade.

Front

The equilibrium level of GDP in a private closed economy is where:

Back

aggregate expenditures equal GDP.

Front

The amount by which an aggregate expenditures schedule must shift downward to eliminate demand-pull inflation and still achieve the full-employment GDP is a(n):

Back

inflationary expenditure gap.

Front

The aggregate demand curve is

Back

downsloping because of the interest-rate, real-balances, and foreign purchases effects.

Front

An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the

Back

multiplier effect.