Which of the following variables in the expenditure model are wholly autonomous and which are partly induced? A)I,G,and X_N are autonomous;S,IM,and C are partly induced. B)I,G,and C are autonomous;S,IM,and X are partly induced. C)I,G,and X are autonomous;S,IM,and C are partly induced. D)G,X,and IM are autonomous;S,C,and I are partly induced.

Question

Quizplus · Accepted Answer

In the expenditure model, autonomous variables are those that are determined independently of other variables while induced variables are those that are influenced by changes in other variables. 
In this case, I (investment), G (government spending), and X (exports) are autonomous variables as they are determined outside the model and not affected by changes in other variables within the model. 
On the other hand, S (saving), IM (imports), and C (consumption) are partly induced variables as they are influenced by changes in income or other variables within the model. 
Therefore, option C correctly identifies the wholly autonomous variables as I, G, and X, and the partly induced variables as S, IM, and C.

Which of the Following Variables in the Expenditure Model Are