Moving along the aggregate expenditure (AE)curve,when real GDP increases,aggregate planned expenditures increase
A)by the same percentage as real GDP.
B)by more than real GDP.
C)by less than real GDP.
D)proportionately with real GDP.
E)by the same amount as real GDP.

Question

Quizplus · Accepted Answer

Aggregate planned expenditures increase by less than real GDP because some components of aggregate expenditure, like consumption, depend on income, which increases with GDP but not proportionately.

Moving Along the Aggregate Expenditure (AE)curve,when Real GDP Increases,aggregate Planned