The part of aggregate planned expenditure that does not vary with real GDP .
A) is induced expenditure
B) equals zero
C) equals equilibrium expenditure
D) is autonomous expenditure

Question

Quizplus · Accepted Answer

Autonomous expenditure refers to the part of aggregate planned expenditure that does not vary with real GDP. Induced expenditure varies with the level of real GDP, while equilibrium expenditure is the level of aggregate expenditure when planned expenditure equals actual output. The answer cannot be B because aggregate planned expenditure always has some level of autonomous expenditure, even if it is small.

The Part of Aggregate Planned Expenditure That Does Not Vary