When autonomous expenditure decreases,___________.
A) the AE curve shifts upward
B) the AE curve becomes less steep
C) the AE curve shifts downward
D) there is a movement down along the AE curve

Question

When autonomous expenditure decreases,___________. 
A) the AE curve shifts upward
B) the AE curve becomes less steep
C) the AE curve shifts downward
D) there is a movement down along the AE curve

Quizplus · Accepted Answer

Autonomous expenditure refers to the part of aggregate expenditure that is not affected by changes in income. When autonomous expenditure decreases, there is a decrease in overall aggregate expenditure, which means a lower level of planned expenditure for all levels of income. This leads to a downward shift in the AE curve.

When Autonomous Expenditure Decreases,___________