Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Figure 23.9
-Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?
A) AE line shifts down, increasing equilibrium output and equilibrium expenditure.
B) AE line shifts up, increasing equilibrium output and equilibrium expenditure.
C) AE line shifts down, decreasing equilibrium output and equilibrium expenditure.
D) AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.

Question

Refer to the information provided in Figure 23.9 below to answer the question(s) that follow.  Figure 23.9
-Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?
A) AE line shifts down, increasing equilibrium output and equilibrium expenditure. 
B) AE line shifts up, increasing equilibrium output and equilibrium expenditure. 
C) AE line shifts down, decreasing equilibrium output and equilibrium expenditure. 
D) AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.

Quizplus · Accepted Answer

A decrease in investment of $20 million will decrease the level of autonomous expenditure, shifting the AE line downwards. This will decrease both equilibrium aggregate expenditure and equilibrium aggregate output.

Refer to the Information Provided in Figure 23