Income-Expenditure Diagram (HSC SSCE Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What do the axes represent in the income-expenditure diagram?
What do the axes represent in the income-expenditure diagram?
Horizontal: Income; Vertical: Expenditure
What does the 45-degree equilibrium line represent?
What does the 45-degree equilibrium line represent?
All points where expenditure equals income
Which formula correctly represents aggregate demand?
Which formula correctly represents aggregate demand?
What is the consumption function?
What is the consumption function?
Why does the AD line cut the y-axis above the origin?
Why does the AD line cut the y-axis above the origin?
Due to autonomous spending at zero income
Why is the AD line flatter than the 45-degree line?
Why is the AD line flatter than the 45-degree line?
MPC < 1, so some income is saved not spent
What causes the AD line to shift upward?
What causes the AD line to shift upward?
Rise in investment or government spending
How does a rise in MPC affect the AD line?
How does a rise in MPC affect the AD line?
Makes the AD line steeper
What is the multiplier effect?
What is the multiplier effect?
Changes in AD cause larger changes in income
What is a deflationary gap?
What is a deflationary gap?
Equilibrium income below full employment