In general, the steeper the aggregate expenditure curve, the

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Quizplus · Accepted Answer

The aggregate expenditure (AE) curve represents the relationship between aggregate income and aggregate expenditure in the economy. The slope of the AE curve depends on the marginal propensity to consume (MPC) and the multiplier.

The formula for the multiplier is: Multiplier = 1/(1-MPC). This means that the larger the MPC, the larger the multiplier, and the steeper the AE curve. Therefore, choice C is the best answer because a steeper AE curve indicates a larger multiplier, which means that a given change in autonomous expenditure will lead to a larger change in equilibrium output.

In General, the Steeper the Aggregate Expenditure Curve, the