When investment is assumed to autonomous the slope of the AD schedule is determined by the ?
Correct answer: C. marginal propensity to consume
- A. marginal propensity to invest
- B. disposable incomes
- C. marginal propensity to consume
- D. average propensity to consume
Explanation
With autonomous investment, investment does not change with income, so changes in aggregate demand arise through consumption. The slope is therefore determined by the marginal propensity to consume.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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