5. AE A B C O 45° D J E F H Y = AE AE₁ AE₂ AE3 Y Refer to the Keynesian Cross diagram shown above. Which of the following statements is correct? The economy will move to the same equilibrium, whether it is initially at point D or F. If the economy is at point D, firms are satisfied with their level of production, given the level of aggregate expenditure, but households are not satisfied with
5. AE A B C O 45° D J E F H Y = AE AE₁ AE₂ AE3 Y Refer to the Keynesian Cross diagram shown above. Which of the following statements is correct? The economy will move to the same equilibrium, whether it is initially at point D or F. If the economy is at point D, firms are satisfied with their level of production, given the level of aggregate expenditure, but households are not satisfied with
Chapter1: Making Economics Decisions
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Transcribed Image Text:5.
AE
A
B
C
O
45⁰
D
F
H
Y = AE
AE₁
AE₂
AE3
Y
Refer to the Keynesian Cross diagram shown above. Which of the following statements is
correct?
The economy will move to the same equilibrium, whether it is initially at point D
or F.
If the economy is at point D, firms are satisfied with their level of production,
given the level of aggregate expenditure, but households are not satisfied with
their level of spending, given the amount of income they are earning.
If the economy is at point F and the government wants the economy's output to
remain unchanged when it is in equilibrium, the government must run a
contractionary fiscal policy.
None of the other statements are correct.
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