In a simple economic model, an increase in business spending on new machinery (not based on current sales) and an increase in household spending from savings (not based on current income) both affect the economy. What is the most significant shared consequence of these two types of spending?

Shared Characteristics of Autonomous Spending Components

In a basic income-expenditure model, a sudden 10% increase in national income is assumed to directly cause a proportional increase in both business spending on new factories and household spending that is independent of income.

In a simple economic model, certain types of spending are not determined by the current level of national income. Match each example of such spending with its most likely external determinant.

Identifying Autonomous Spending in Economic Scenarios

Comparing Autonomous Spending Components

In a simple income-expenditure model, both business spending on new equipment determined by long-term expectations and the portion of household spending that does not change with current income are considered ________ because their values are assumed to be independent of the current level of aggregate output.

In a simplified economic model, why are business spending on new factories (based on long-term forecasts) and the minimum level of household spending (necessary regardless of income) often treated similarly in the initial analysis?

Consider two separate events in an economy: businesses increase spending on new factories based on optimistic long-term forecasts, and households increase spending out of their savings due to greater confidence in the future. In a basic income-expenditure model, what is the most accurate way to characterize both of these spending changes?

An economy experiences a significant, unexpected increase in its overall income level. Which of the following scenarios describes a change in spending that is considered 'autonomous' and therefore not a direct result of this income increase?