What is the difference between an autonomous change in spending and an induced change in spending?
What will be an ideal response?
An autonomous expenditure is expenditure that does not depend on the level of GDP. A decline in income (due to a decline in GDP) leads to an induced decline in consumption.
You might also like to view...
The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended
that the railroad's revenues would fall because of the rate hike. It can be concluded that: A. both groups felt that the demand was elastic but for different reasons. B. both groups felt that the demand was inelastic but for different reasons. C. the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic. D. the railroad felt that the demand for passenger service was elastic and opponents of the rate increase felt it was inelastic.
We can expect producers to pay:
A. None of these statements is true. B. more for land with lower productivity. C. less for land with higher productivity. D. less for land with lower productivity.