Any expenditure component that depends on the level of real GDP is called
A) induced expenditure.
B) equilibrium expenditure.
C) autonomous expenditure.
D) spurious expenditure.

Question

Quizplus · Accepted Answer

Induced expenditure refers to any expenditure component that varies with the level of real GDP, such as consumption expenditure, investment expenditure, and government expenditure. As real GDP increases, induced expenditure also tends to increase, and as real GDP decreases, induced expenditure tends to decrease. Autonomous expenditure, on the other hand, refers to any expenditure component that does not depend on the level of real GDP, such as exports and government spending that are not influenced by changes in real GDP. Equilibrium expenditure refers to the level of total expenditure in the economy that balances total production (real GDP), while spurious expenditure is not a recognized economic term.

Any Expenditure Component That Depends on the Level of Real