On the aggregate expenditure graph,if autonomous investment increases by $20 billion,
A)the aggregate expenditure line shifts upward by $20 billion
B)planned saving increases by $20 billion
C)the aggregate expenditure line shifts downward by $20 billion
D)planned saving decreases by $20 billion
E)the equilibrium level of real GDP demanded increases by $20 billion

Question

Quizplus · Accepted Answer

Autonomous investment is a component of planned investment, which is shown on the vertical axis of the aggregate expenditure graph. An increase in autonomous investment would shift the aggregate expenditure line upward by the same amount. This is because the increase in investment would lead to an increase in overall spending in the economy, which would shift the aggregate expenditure line upward.

On the Aggregate Expenditure Graph,if Autonomous Investment Increases by $20