Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A) consumption spending increases.
B) investment decreases.
C) imports increase.
D) exports decrease.

Question

Using Figure 2 above, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE3 might be:
A) consumption spending increases. 
B) investment decreases. 
C) imports increase. 
D) exports decrease.

Quizplus · Accepted Answer

If consumption spending increases, it would shift the aggregate expenditure curve upwards from PAE2 to PAE3 as shown in Figure 2.

Using Figure 2 Above, Suppose That the Economy Started at PAE2