Which of the following statements concerning a change in government purchases is true?

1. The slope of the expenditure line and the magnitude of the AD curve's shift are negatively correlated.
2. The slope of the expenditure line does not affect the magnitude of the AD curve's shift.
3. The slope of the expenditure line and the magnitude of the AD curve's shift are positively correlated.
4. The correlation between the slope of the expenditure line and the magnitude of the AD curve's shift depends negatively on the rate of inflation.
5. The correlation between the slope of the expenditure line and the magnitude of the AD curve's shift depends positively on the rate of inflation.

Answer rating: 100% (QA)

The following statement is true concerning a change in government purchases The slope of t... View the full answer