Refer to the information provided in Figure 8.9 below to answer the questions that follow. Figure 8.9
-Refer to Figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?
A) AE line shifts down, increasing equilibrium output and equilibrium expenditure.
B) AE line shifts up, increasing equilibrium output and equilibrium expenditure.
C) AE line shifts down, decreasing equilibrium output and equilibrium expenditure.
D) AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.

Question

Refer to the information provided in Figure 8.9 below to answer the questions that follow.  Figure 8.9
-Refer to Figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million?
A) AE line shifts down, increasing equilibrium output and equilibrium expenditure. 
B) AE line shifts up, increasing equilibrium output and equilibrium expenditure. 
C) AE line shifts down, decreasing equilibrium output and equilibrium expenditure. 
D) AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure.

Quizplus · Accepted Answer

A decrease in investment will shift the AE line downward, decreasing both the equilibrium output and equilibrium expenditure.

Refer to the Information Provided in Figure 8