In the income-expenditure model, if autonomous saving decreases by $15 billion, _____
A) the aggregate expenditure line shifts upward by $15 billion.
B) planned investment increases by $15 billion.
C) the aggregate expenditure line shifts downward by $15 billion.
D) planned investment decreases by $15 billion.
E) the equilibrium level of real GDP demanded decreases by $15 billion.

Question

Quizplus · Accepted Answer

A decrease in autonomous saving implies that at each level of income, households are saving less and spending more. This increases the aggregate expenditure at each income level, shifting the aggregate expenditure line upward.

In the Income-Expenditure Model, If Autonomous Saving Decreases by $15