Which of the following is not true with regard to the aggregate expenditure model?
A)It explains short-run business cycles.
B)It explains inflation.
C)It assumes that consumption spending is the primary determinant of aggregate demand.
D)It includes investment, government spending, and net exports.

Question

Which of the following is not true with regard to the aggregate expenditure model?
A)​It explains short-run business cycles.
B)​It explains inflation.
C)​It assumes that consumption spending is the primary determinant of aggregate demand.
D)​It includes investment, government spending, and net exports.

Quizplus · Accepted Answer

The aggregate expenditure model does not directly explain inflation. It focuses on the relationship between aggregate demand and output level in the short run.

Which of the Following Is Not True with Regard to the Aggregate