In the Keynesian cross diagram, the vertical intercept of the expenditure line equals ________ and the slope of the expenditure line equals ________.
A)induced expenditures; autonomous expenditures
B)autonomous expenditures; induced expenditures
C)planned spending; unplanned spending
D)autonomous expenditures; the mpc

Question

Quizplus · Accepted Answer

The total amount of expenditures has two parts: the autonomous part (shown by the vertical intercept), which is independent of output, and the induced part, which depends on output. In the basic Keynesian model, only consumption has an induced component, and the mpc shows the rate at which expenditure rises when output rises.

In the Keynesian Cross Diagram, the Vertical Intercept of the Expenditure