An increase in autonomous consumer expenditure causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant.
A) rise; MP; right
B) rise; IS; right
C) fall; MP; left
D) fall; IS; left

Question

Quizplus · Accepted Answer

An increase in autonomous consumer expenditure would cause an increase in aggregate demand, leading to a rightward shift in the IS curve, as it shows the relationship between interest rates and aggregate output. A rise in the equilibrium level of aggregate output would also occur at any given interest rate due to the increase in consumption expenditure.

An Increase in Autonomous Consumer Expenditure Causes the Equilibrium Level