Other things equal, a decrease in autonomous consumption shifts the ________ curve to the ________.
A) IS; right
B) IS; left
C) MP; left
D) MP; right

Question

Quizplus · Accepted Answer

Autonomous consumption is a component of planned aggregate expenditure and is represented by the vertical intercept on the planned expenditure line. A decrease in autonomous consumption represents a decrease in the total amount of planned expenditure at every level of income, causing the planned expenditure line to shift downward. This means that at any given level of income, planned expenditure will be lower than it was before the decrease in autonomous consumption, which can be represented by a leftward shift in the IS curve.

Other Things Equal, a Decrease in Autonomous Consumption Shifts the ________