Question

In the aggregate expenditures model, it is assumed that:

a) gross investment (I) and government purchases (G) are both independent of real GDP (Y), but net exports (NX) are not.

b) gross investment (I), government purchases (G), and net exports (NX) are all independent of real GDP (Y).

c) government purchases (G) are independent of real GDP (Y), but gross investment (I) and net exports (NX) are not.

d) gross investment (I), government purchases (G), and net exports (NX) will all increase when real GDP (Y) increases.