• Assuming that there is no government spending or trade, an economy's GDP is the sum of domestic consumption C and investment I, ie. Y = C+I • Assume that I is unaffected by GDP • Assume the consumption function is C = co + cY • In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which of the following statements is correct? I Select one or more: O a. The aggregate demand equation is given by AD = Co + CY + I O b. C is equal to autonomous consumption Oc. if c, is a number between 0 and 1, and I+Co >0 then the aggregate demand equation is a straight line that must intersect the 45 degree line at some point. O d. In a demand-driven economy the AD curve is a vertical line D e. In a demand-driven economy demand is equal to supply in equilibrium O f. In a supply-driven economy demand is equal to supply in equilibrium In a demand-driven economy, supply creates its own demand O h. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = (Co + D/(1-C).

• Assuming that there is no government spending or trade, an economy's GDP is the sum of domestic consumption C and investment I, ie. Y = C+I • Assume that I is unaffected by GDP • Assume the consumption function is C = co + cY • In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which of the following statements is correct? I Select one or more: O a. The aggregate demand equation is given by AD = Co + CY + I O b. C is equal to autonomous consumption Oc. if c, is a number between 0 and 1, and I+Co >0 then the aggregate demand equation is a straight line that must intersect the 45 degree line at some point. O d. In a demand-driven economy the AD curve is a vertical line D e. In a demand-driven economy demand is equal to supply in equilibrium O f. In a supply-driven economy demand is equal to supply in equilibrium In a demand-driven economy, supply creates its own demand O h. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = (Co + D/(1-C).

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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Similar questions

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