If there are strong expectations of future economic growth, then the:
A) economy will move to the right along the existing consumption function.
B) economy will move to the left along the existing consumption function.
C) consumption function will shift downward.
D) investment demand curve will shift upward.

Question

Quizplus · Accepted Answer

Strong expectations of future economic growth would lead firms to increase their investment, which would shift the investment demand curve upward. This would result in an increase in aggregate demand and a movement along the existing consumption function to the right.

If There Are Strong Expectations of Future Economic Growth, Then