FIGURE 21-3 Refer to Figure 21-3.Assuming AE₀ is the prevailing aggregate expenditure function,the distance 0A is a measure of A)aggregate expenditure at equilibrium national income. B)autonomous desired expenditures. C)induced expenditures. D)desired saving. E)desired investment.

Question

Quizplus · Accepted Answer

The distance 0A represents the level of autonomous desired expenditures, which are the expenditures that do not depend on national income. As national income increases, induced expenditures (C + I) also increase, causing the aggregate expenditure function to shift upwards. Therefore, 0A represents the level of expenditures that would exist even if income were zero.