1 answer

Exhibit 23-5 Spending 45-degree line E Expenditure line Income or Real GDP Reference: Ref 11-3 If...

Question:


Exhibit 23-5 Spending 45-degree line E Expenditure line Income or Real GDP Reference: Ref 11-3 If spending was equal to the a
Exhibit 23-5 Spending 45-degree line E Expenditure line Income or Real GDP Reference: Ref 11-3 If spending was equal to the amount corresponding to point B in Exhibit 23-5, aggregate output would increase. aggregate output would decrease. spending is too high, and the expenditure line will shift down. the economy would be in equilibrium the marginal propensity to consume would increase.

Answers

Ans) the correct option is a) aggregate output would increase

At point B, aggregate expenditure exceeds output so it will push towards higher equilibrium GDP

.

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