The development of a new cost-saving technology would increase
A) autonomous consumption spending and,thus,shift the ADI curve to the right.
B) autonomous consumption spending and,thus,shift the ADI curve to the left.
C) autonomous investment spending and,thus,shift the ADI curve to the right.
D) autonomous investment spending and,thus,shift the ADI curve to the left.
E) net exports and government purchases and,thus,shift the ADI curve to the right.

Question

Quizplus · Accepted Answer

The development of a new cost-saving technology would lead to a decrease in the cost of production, which in turn would increase profitability and encourage investment. This increase in investment spending is an increase in autonomous investment spending, which would shift the ADI curve to the right. Therefore, the correct answer is C.

The Development of a New Cost-Saving Technology Would Increase