Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. Which of the following causes the aggregate expenditures curve to shift downwards?
A) a decrease in taxes
B) an increase in imports
C) an increase in government spending
D) an increase in investment

Question

Quizplus · Accepted Answer

An increase in imports would decrease net exports (NX = exports - imports), which in turn would decrease aggregate expenditure (AE = C + I + G + NX). Therefore, the aggregate expenditures curve would shift downwards.

Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate