Author Question: What is the key difference between the aggregate expenditure model and the aggregate ... (Read 43 times)

nummyann · **on:** Jun 30, 2018

What is the key difference between the aggregate expenditure model and the aggregate demand/aggregate supply model?

A) The aggregate expenditure model examines monetary policy, whereas the aggregate demand/aggregate supply model does not.
B) The aggregate demand/aggregate supply model assumes that the price level is fixed.
C) The aggregate expenditure model assumes that real GDP is fixed.
D) The aggregate expenditure model assumes that the price level is fixed.
E) Monetary and real factors interact in the aggregate demand/aggregate supply model.

Question 2

The bias in the CPI affects government outlays because the overstatement of inflation

A) means that tax receipts are less than what is needed to cover government outlays.
B) decreases government outlays by more than what is justified.
C) increases government outlays by more than what is justified.
D) decreases social welfare benefits.
E) increases fiscal pressure.