For each one dollar increase in real GDP, aggregate planned expenditure
A)increases by less than a dollar.
B)is unaffected.
C)increases by one dollar.
D)increases only if autonomous expenditure increases.
E)increases by more than a dollar.

Question

Quizplus · Accepted Answer

Aggregate planned expenditure increases by less than a dollar for each one dollar increase in real GDP because of the marginal propensity to consume, which is less than one.

For Each One Dollar Increase in Real GDP, Aggregate Planned