when government spending and net exports are added into the keynesian model\na. the 45 - degree curve shifts…
when government spending and net exports are added into the keynesian model\na. the 45 - degree curve shifts upward.\nb. the aggregate expenditures function shifts.\nc. there is only a movement along the aggregate expenditure curve.\nd. the slope of the aggregate expenditure function rises.
Answer
Brief Explanations:
In the Keynesian model, government spending and net - exports are components of aggregate expenditure. When they change, the aggregate expenditures function shifts. A change in non - price level factors like government spending and net exports causes a shift in the aggregate expenditure curve, not just a movement along it. The 45 - degree curve represents equilibrium and doesn't shift due to these changes, and the slope of the aggregate expenditure function is determined by the marginal propensity to consume and other factors and isn't directly affected by adding government spending and net exports in terms of a slope change.
Answer:
B. the aggregate expenditures function shifts.