Question

Autonomous expenditure is the portion of planned aggregate expenditure that?

1) Equals aggregate output
2) Equals planned spending
3) Is independent of output
4) Equals induced expenditure

Answer 1

Autonomous expenditure is the component of aggregate expenditure that is independent of a nation's output or income, encompassing spending such as government investments.

Step-by-step explanation:

Autonomous expenditure is the part of planned aggregate expenditure that is independent of output. This means, it does not change with fluctuations in a nation's income or real GDP. Examples of autonomous expenditures include most government spending, such as infrastructure investment, and other spending that does not vary with the level of a country's income, like basic research investments. When considering the components of aggregate demand, which includes consumption expenditure, investment expenditure, government spending, and net exports, autonomous spending is not reactive to changes in national income, distinguishing it from induced expenditure, which does rise as national income rises.