To understand how a change in government purchases affects real GDP in the short run, we need to focus on
A) the identity between real GDP and income and the identity between real GDP and potential GDP.
B) the consumption function and the identity between real GDP and income.
C) the identity between real GDP and income and the identity between disposable income and real GDP.
D) the consumption function and the identity between real GDP and disposable income.
E) the consumption function and the identity between real GDP and potential GDP.
Correct Answer:
Verified
Q93: Define the marginal propensity to consume. Graphically,
Q94: The consumption relationship in this chapter assumes
Q95: Which of the following statements is true?
A)A
Q96: If foreigners decide to increase their purchases
Q97: The consumption function is a straight-line relationship
Q99: The marginal propensity to consume is best
Q100: Does it make a difference whether disposable
Q101: Only changes in consumption spending will shift
Q102: Changes in spending behavior shift the expenditure
Q103: Which of the following will cause an
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