In the income-expenditure model, if autonomous investment increases by $10 billion, _____
A) the aggregate expenditure line shifts upward by $10 billion.
B) planned saving increases by $10 billion.
C) the aggregate expenditure line shifts downward by $10 billion.
D) planned saving decreases by $10 billion.
E) the equilibrium level of real GDP demanded increases by $10 billion.

Question

Quizplus · Accepted Answer

Autonomous investment is a component of aggregate expenditure, so an increase in autonomous investment will shift the aggregate expenditure line upward by the same amount.

In the Income-Expenditure Model, If Autonomous Investment Increases by $10