What is the difference between induced and autonomous ...

[Arii_bell]

What is the difference between induced and autonomous expenditure? Which components of aggregate expenditure fall under which category?
 
  What will be an ideal response?

Question 2

The table above gives the production possibilities frontier for two countries, Anaconda and Bear. The opportunity cost of moving from ________ is greater for ________.
 
  A) point E to point D; Bear
  B) point A to point B; Anaconda
  C) point B to point A; Bear
  D) point D to point E; Bear
  E) any point to any other point; Bear

[ngr69]

Answer to Question 1

Induced expenditure is expenditure that depends on the level of real GDP, so that when real GDP changes, induced expenditure changes. Autonomous expenditure is independent of the level of real GDP, so that when real GDP changes, autonomous expenditure does not change. Consumption expenditure includes elements of both autonomous and induced expenditure. So, too, do imports. However, investment, government expenditure on goods and services, and exports are all autonomous expenditure.

Answer to Question 2

D

[Arii_bell]

Thank you

[ngr69]

Happy to help you