An increase in aggregate expenditure has what result on equilibrium GDP?
A)Equilibrium GDP rises.
B)Equilibrium GDP is not affected by a decrease in aggregate expenditure.
C)Equilibrium GDP falls.
D)Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditure will lead to an increase in demand for goods and services, resulting in an increase in production and thus an increase in equilibrium GDP.

An Increase in Aggregate Expenditure Has What Result on Equilibrium