Question

. Indicate whether the following components affect the slope or intercept of the Aggregate Demand line....

. Indicate whether the following components affect the slope or intercept of the Aggregate Demand line.

Marginal Propensity to Import:affects slope or intercept or both

Autonomous Consumption: affects slope or intercept or both

Government Spending: affects slope or intercept or both
Marginal Propensity to Consume: Exports: affects slope or intercept or both
Investment: affects slope or intercept or both
Taxes: affects slope or intercept or both
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Answer #1

Marginal Propensity to import affects slope.

Autonomous Consumption affects intercept.

Government spending affects intercept.

Marginal Propensity to consume affects slope.

Investment affect intercept.

Taxes affects intercept.

Note: Autonomous expenditure are the vertical intercepts. It includes autonomous consumption, autonomous investment, autonomous government spending, autonomous net export and the adjustment of autonomous taxes.

Induced expenditure are the slope of aggregate demand line. It includes MPC, MPI, MPM.

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