Economic environments that have lower levels of planned aggregate expenditure for a given level of output have:
A) PAE curves that are higher on the expenditure diagram.
B) PAE curves that are lower on the expenditure diagram.
C) higher levels of imports.
D) higher levels of inventory.

Question

Quizplus · Accepted Answer

Lower levels of planned aggregate expenditure for a given level of output indicate that there is less spending in the economy. This could be due to factors such as low consumer confidence, reduced government spending, or lower investment levels. As a result, the PAE curve would shift downwards on the expenditure diagram, indicating a lower level of planned aggregate expenditure at each level of output. Higher levels of imports or inventory may or may not be present depending on other factors affecting the economy.

Economic Environments That Have Lower Levels of Planned Aggregate Expenditure