• Assuming that there is no government spending or trade, an economy's GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I • Assume that I is unaffected by GDP • Assume the consumption function is C = co + c,Y • In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which of the following statements is correct? This question is worth 2 marks! 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 O c.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 O 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 O g. 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-c1 )

• Assuming that there is no government spending or trade, an economy's GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I • Assume that I is unaffected by GDP • Assume the consumption function is C = co + c,Y • In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which of the following statements is correct? This question is worth 2 marks! 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 O c.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 O 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 O g. 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-c1 )

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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