In the simple aggregate expenditure model,the slope of the aggregate expenditure line depends on:
A)interest rates.
B)real gross domestic product.
C)the price level.
D)the marginal propensity to consume.
E)the marginal propensity to save.

Question

Quizplus · Accepted Answer

The slope of the aggregate expenditure line depends on the marginal propensity to consume, which is the change in consumer spending for a given change in disposable income. As consumer spending is a component of aggregate expenditure, the aggregate expenditure line slopes upward with an increase in the marginal propensity to consume.

In the Simple Aggregate Expenditure Model,the Slope of the Aggregate