According to the aggregate expenditures model, an increase in the aggregate expenditures curve for an economy will lead to:
A) higher output and lower prices.
B) lower prices and fewer jobs.
C) higher output and more jobs.
D) lower output and higher prices.

Question

Quizplus · Accepted Answer

An increase in the aggregate expenditures curve indicates that at every price level, the total spending (consumption, investment, government spending, and net exports) in the economy is higher. This leads to an increase in demand for goods and services, which typically results in higher output (production) and more jobs as businesses expand to meet the increased demand.

According to the Aggregate Expenditures Model, an Increase in the Aggregate