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

Question

Quizplus · Accepted Answer

For each one dollar increase in real GDP, aggregate planned expenditure increases by less than a dollar due to the marginal propensity to consume being less than one. This means that not all of the additional income will be spent.

For Each One Dollar Increase in Real GDP, Aggregate Planned