An increase in autonomous aggregate expenditures
A) causes a movement along the aggregate expenditures curve.
B) causes a movement along the aggregate demand curve.
C) increases the value of the multiplier.
D) shifts the aggregate demand curve to the right.

Question

Quizplus · Accepted Answer

An increase in autonomous aggregate expenditures will shift the aggregate demand curve to the right as it reflects an increase in the demand for goods and services in the economy. Choice A is incorrect as a movement along the aggregate expenditures curve would imply a change in the price level, which is not necessarily the case with an increase in autonomous aggregate expenditures. Choice B is incorrect because autonomous aggregate expenditures are not the same as aggregate demand, which is determined by both autonomous and induced expenditures. Choice C is also incorrect as the value of the multiplier is determined by the marginal propensity to consume, which is not directly affected by an increase in autonomous aggregate expenditures.

An Increase in Autonomous Aggregate Expenditures