The ________ model focuses on the relationship between total spending and real GDP in the short run, assuming the price level is constant.
A)supply and demand
B)national income
C)aggregate expenditure
D)business cycle
E)aggregate demand model

Question

Quizplus · Accepted Answer

The aggregate expenditure model (also known as the Keynesian cross model) focuses on the relationship between total spending (consumption, investment, government spending, and net exports) and real GDP in the short run, assuming the price level is constant. This model forms the basis of Keynesian economics and emphasizes the importance of government intervention in the economy to address fluctuations in aggregate demand.

The ________ Model Focuses on the Relationship Between Total Spending