1. A change in the interest rate creates a movement along the consumption function.

(3 marks)

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Reason:

1. The autonomous components of aggregate expenditures are consumption, savings, and investment. (3 marks)

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Reason:

1. Components of induced aggregate expenditure include government expenditure, investment and consumption expenditure. (3 marks)

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Reason:

1. Corporate income taxes are the largest source of revenue for the federal government.

(3 marks)

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Reason:

1. A tax cut decreases government saving and can thereby crowd out investment.

(3 marks)

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Reason:

1. The aggregate demand curve is shifted rightward by an increase in tax rates. (3 marks)

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Reason:

1. A depository institution receives deposits from lenders and makes loans to borrowers.

(3 marks)

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Reason:

1. If the central bank sells bonds in the open market, net exports will increase. (3 marks)

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Reason:

1. In the short run, the central bank's actions to fight inflation shift the aggregate demand curve leftward. (3 marks)

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Reason:

10.A positive output gap is an inflationary gap. (3 marks)

Answer:

Reason