In most derivations of the aggregate expenditures model, investment is assumed to be independent of real GDP. What would be the effect on the aggregate expenditures (AE) function if investment spending were positively related to income?
a. The intercept of the AE function would rise.
b. The slope of the AE function would become flatter.
c. Both the slope and the intercept of the AE function would increase.
d. The slope of the AE function would become steeper.
e. The intercept of the AE function would increase, and its slope would become flatter.
d
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Changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost, and profitability
Indicate whether the statement is true or false
Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease?
A) an increase in the price of white wine grapes B) a decrease in the price of white wine grapes C) an increase in the demand for red wine grapes D) an increase in the price of red wine