In a graph with real GDP on the horizontal axis and aggregate expenditures on the vertical axis, induced aggregate expenditures are represented by

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Quizplus · Accepted Answer

Induced aggregate expenditures are those that increase as a result of an increase in real GDP. As real GDP increases, people's income also increases, causing them to spend more on consumption expenditures. This relationship between real GDP and aggregate expenditures is represented by an upward sloping line with a positive vertical intercept, as total spending (or aggregate expenditures) must be greater than zero even when real GDP is zero.

In a Graph with Real GDP on the Horizontal Axis