Suppose at each price level, autonomous aggregate expenditures increase by $50 billion. As a result, the aggregate expenditures curve shifts
A) downward at each price level and results in a leftward shift in aggregate demand.
B) upward at each price level and results in a rightward shift in aggregate demand.
C) downward at each price level and results in a movement down along a given aggregate demand.
D) upward at each price level and results in a movement up along a given aggregate demand.

Question

Quizplus · Accepted Answer

An increase in autonomous aggregate expenditures would shift the aggregate expenditures curve up at each price level, resulting in a rightward shift in aggregate demand. Therefore, only option B accurately describes the effect of the increase in autonomous aggregate expenditures.

Suppose at Each Price Level, Autonomous Aggregate Expenditures Increase by $50