The formula for the aggregate consumption function is [C = a + b(Y - T)] ________ the income-expenditure model.
A. after net exports are added to
B. when consumption is left out of
C. after government is subtracted from
D. after government is added to
Answer: D
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When the price level declines
A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve. B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left. C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve. D) the interest rate is not affected, so there is no movement along the aggregate demand curve.
When computing percentage changes, using the simple approach results in increases and decreases which are
A) identical. B) symmetric. C) more accurate than using the midpoint method. D) not symmetric.