Change in autonomous aggregate expenditures
Macroeconomics
1. Your college or university, if it does what many others do, occasionally releases a news story claiming that its impact on the total employment in the local economy is understated by its own employment statistics. If the institution keeps accurate statistics, is that possible?
2. Suppose the level of investment in a certain economy changes when the level of real GDP changes; an increase in real GDP induces an increase in investment, while a reduction in real GDP causes investment to fall. How do you think such behavior would affect the slope of the aggregate expenditures curve? The multiplier?
3. Give an intuitive explanation for how the multiplier works on a reduction in autonomous aggregate expenditures. Why does equilibrium real GDP fall by more than the change in autonomous aggregate expenditures?
