In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a: a. decrease in government spending or an increase in taxes b. decrease in taxes or an increase in government spending c. decrease in interest rates or a decrease in taxes d. decrease in saving or an increase in government spending

In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a decrease in government spending or an increase in taxes

Option A

Explanation:

In financial aspects, total use (AE) is a proportion of national salary. Total consumption is characterized as the present estimation of all the completed merchandise and enterprises in the economy. The total use is in this manner the entirety of the considerable number of uses attempted in the economy by the variables during a given time span.

It is the consumption acquired on customer merchandise, arranged speculation and the use made by the administration in the economy. In an open economy situation, total use likewise incorporates the contrast between the fares and the imports.  

Total consumptions is characterized as : AE = C+Ip+G+NX,  

C = Household Consumption  

Ip = Planned Investment  

G = Government spending  

NX = Net fares (Exports − Imports)  

Total consumption gives one approach to figure the aggregate of all financial action in an economy, which is alluded to as the GDP of an economy.

The GDP is determined through the total consumption model, otherwise called the Keynesian cross. AE is likewise utilized in the total interest total inventory model which progresses the total uses model with the incorporation of value changes.

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