Y - AD on 45-degree line AD c, + I(r) + G +X 45° Output (income), Y Note: AD = c, + c,(1 – t)Y + I(r) + G +X- my AD is the Aggregate Demand Function where CO is the autonomous part of consumption spending, C1 is marginal propensity to consume, and (1-t)Y is the disposable income. I = I where Investment spending is a function of the real interest rate(r). G is the government spending and t represents tax rate. X is exports and mY is the imports where m represents marginal propensity to import. Choose the INCORRECT statement: A lower propensity to import increases equilibrium output A higher propensity to consume leads to higher equilibrium output A lower propensity to consume makes the AD curve steeper A lower interest rate leads to higher equilibrium output O o o O Aggregate demand, AD
Y - AD on 45-degree line AD c, + I(r) + G +X 45° Output (income), Y Note: AD = c, + c,(1 – t)Y + I(r) + G +X- my AD is the Aggregate Demand Function where CO is the autonomous part of consumption spending, C1 is marginal propensity to consume, and (1-t)Y is the disposable income. I = I where Investment spending is a function of the real interest rate(r). G is the government spending and t represents tax rate. X is exports and mY is the imports where m represents marginal propensity to import. Choose the INCORRECT statement: A lower propensity to import increases equilibrium output A higher propensity to consume leads to higher equilibrium output A lower propensity to consume makes the AD curve steeper A lower interest rate leads to higher equilibrium output O o o O Aggregate demand, AD
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please be quick and solve step by step
![Y - AD on 45-degree line
AD
c, + I(r) + G + X
45°
Output (income), Y
Note: AD = c, + c,(1 – t)Y + I(r) + G +X-mY
AD is the Aggregate Demand Function where CO is the autonomous part of consumption spending, C1 is marginal propensity to consume, and (1-t)Y is the disposable income. I = 1 (r)
where Investment spending is a function of the real interest rate(r). G is the government spending and t represents tax rate. X is exports and mY is the imports where m represents
marginal propensity to import.
Choose the INCORRECT statement:
A lower propensity to import increases equilibrium output
A higher propensity to consume leads to higher equilibrium output
A lower propensity to consume makes the AD curve steeper
A lower interest rate leads to higher equilibrium output
Aggregate demand, AD](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F90a8ca7b-90a7-4637-b35d-d4a63b4d8fbf%2Fe43e8e2e-3898-4c3c-bf67-c57a50433522%2Fc7h8v9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Y - AD on 45-degree line
AD
c, + I(r) + G + X
45°
Output (income), Y
Note: AD = c, + c,(1 – t)Y + I(r) + G +X-mY
AD is the Aggregate Demand Function where CO is the autonomous part of consumption spending, C1 is marginal propensity to consume, and (1-t)Y is the disposable income. I = 1 (r)
where Investment spending is a function of the real interest rate(r). G is the government spending and t represents tax rate. X is exports and mY is the imports where m represents
marginal propensity to import.
Choose the INCORRECT statement:
A lower propensity to import increases equilibrium output
A higher propensity to consume leads to higher equilibrium output
A lower propensity to consume makes the AD curve steeper
A lower interest rate leads to higher equilibrium output
Aggregate demand, AD
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education