An increase in autonomous consumer expenditure causes the aggregate demand function to shift up, the equilibrium level of aggregate output to ________, and the IS curve to shift to the ________, everything else held constant.
A) rise; left
B) rise; right
C) fall; left
D) fall; right

Question

Quizplus · Accepted Answer

An increase in autonomous consumer expenditure would cause an increase in aggregate demand leading to a rise in equilibrium level of aggregate output. As a result, the IS curve would shift to the right.

An Increase in Autonomous Consumer Expenditure Causes the Aggregate Demand