Autonomous expenditure refers to
A) aggregate expenditure solely prompted by policy.
B) aggregate expenditure that varies because of changes in real GDP.
C) aggregate expenditure that does not change when real GDP changes.
D) changes in short-run aggregate supply.

Question

Quizplus · Accepted Answer

Autonomous expenditure refers to aggregate expenditure that does not change when real GDP changes. This includes government spending, investment spending by firms, and consumer spending on necessities like food and shelter. It is considered "autonomous" because it is not driven by changes in income or output, but rather by other factors such as government policy or consumer preferences.

Autonomous Expenditure Refers to