If there is a decline in world autonomous consumption ________.
A)domestic investment would decline
B)the domestic real interest rate would fall
C)net exports would go up
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

A decline in autonomous consumption would decrease aggregate demand, leading to a decrease in domestic investment, but it would also decrease the demand for imports, leading to an increase in net exports. As a result, the domestic real interest rate would fall due to decreased demand, making investment more attractive. However, this effect may not offset the negative impact on investment completely, so option D cannot be the correct answer. Option C is incorrect as net exports would increase, not decrease.

If There Is a Decline in World Autonomous Consumption ________