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

Question

Quizplus · Accepted Answer

Aggregate planned expenditure increases by less than a dollar due to the marginal propensity to consume, which is typically less than one.

For Each One Dollar Increase in Real GDP, Aggregate Planned