The aggregate expenditures function:
A)has the same slope as the aggregate demand curve.
B)is the key determinant of equilibrium real GDP in a fixed-price model.
C)is negatively related to household consumption.
D)is negatively related to net exports.
E)is equal to C+I+G-X.

Question

Quizplus · Accepted Answer

The aggregate expenditures function is the sum of consumption spending, investment spending, government spending, and net exports (C+I+G+NX). In a fixed-price model, equilibrium GDP occurs where aggregate expenditures equal output, so the aggregate expenditures function is the key determinant of equilibrium real GDP.

The Aggregate Expenditures Function