List the components of aggregate expenditure and describe how each of them changes as real GDP increases
What will be an ideal response?
The components of aggregate expenditure are consumption expenditure, investment, government expenditures on goods and services, exports, and imports. As real GDP increases, consumption expenditure and imports increase. However, investment, government expenditure on goods and services, and exports do not change—they are examples of autonomous expenditure, spending that does not change when real GDP changes.
You might also like to view...
An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called
A) collusion. B) intrusion. C) profit seeking. D) rent seeking.
Highway traffic is a mixed good because
a. some people like it and others do not b. drivers creates costs that are borne by other drivers c. it is not free of charge d. because highways are rivalrous, but not easily excludable e. because highways are excludable, but not easily rival