If autonomous consumption decreases,which of the following would occur in the short run?
A) a decrease in GDP,a decrease in the price level,a decrease in money demand and a decrease in the interest rate.
B) an increase in GDP,an increase in the price level,an increase in money demand and an increase in the interest rate.
C) a decrease in GDP,an increase in the price level,an increase in money demand and an increase in the interest rate.
D) an increase in GDP,a decrease in the price level,a decrease in money demand and an increase in the interest rate.
E) a decrease in GDP,a decrease in the price level,an increase in money demand and an increase in the interest rate.

Question

Quizplus · Accepted Answer

A decrease in autonomous consumption reduces aggregate demand, leading to a decrease in GDP and the price level. Lower GDP reduces money demand, leading to a decrease in the interest rate.

If Autonomous Consumption Decreases,which of the Following Would Occur in the Short