Figure 24-1

-Refer to Figure 24-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending would be represented by a movement from
A) AD₁ to AD₂.
B) AD₂ to AD₁.
C) point A to point B.
D) point B to point A.

Question

Figure 24-1
 
-Refer to Figure 24-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending would be represented by a movement from
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

Quizplus · Accepted Answer

An increase in firms' expectations of future profitability would lead to an increase in investment spending, which shifts the aggregate demand curve to the right, from AD₁ to AD₂.

Figure 24-1 -Refer to Figure 24-1.Ceteris Paribus,an Increase in Firms' Expectations of in Firms