An increase in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________, everything else held constant.
A) up; rise
B) up; fall
C) down; rise
D) down; fall

Question

Quizplus · Accepted Answer

An increase in autonomous consumer expenditure will increase consumption expenditure, which is a component of aggregate demand. Therefore, it will cause the aggregate demand function to shift up. The increase in aggregate demand will result in an increase in the equilibrium level of aggregate output, everything else held constant.

An Increase in Autonomous Consumer Expenditure Causes the Aggregate Demand