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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The TE curve in Exhibit 12 (d) is upward sloping because the consumption function is upward sloping. Explain.

To determine

The upward sloping of the total expenditure curve as the consumption function is upward sloping.

Explanation

The expenditures are of three types in the closed economy and they are the consumption expenditure, investment expenditure, and the government purchases. These three expenditures in the economy are the expenditures that constitute the total expenditure of the economy. Thus, the total expenditure is the vertical summation of these three different expenditures of the economy. The shape of the TE curves of the economy is given as follows:

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