In the Keynesian cross diagram,a decline in autonomous consumer expenditure causes the aggregate demand function to shift ________,the equilibrium level of aggregate output to fall,and the IS curve to shift to the ________,everything else held constant.
A)up;left
B)up;right
C)down;left
D)down;right

Question

Quizplus · Accepted Answer

A decline in autonomous consumer expenditure reduces the aggregate demand at every level of income, which shifts the aggregate demand function downward. As a result, the equilibrium level of aggregate output would fall, and the IS curve would shift to the left, representing a lower level of output for any given interest rate.

In the Keynesian Cross Diagram,a Decline in Autonomous Consumer Expenditure