If autonomous consumption decreases by 50, then:
A) equilibrium Y will decrease to 300, while equilibrium leakages will remain unchanged.
B) equilibrium Y will decrease to 300, while equilibrium leakages will also decrease to 90.
C) equilibrium Y will remain unchanged at 400, while equilibrium leakages will decrease to 90.
D) equilibrium Y will remain unchanged, while equilibrium leakages will also remain unchanged.

Question

Quizplus · Accepted Answer

Equilibrium Y will decrease because autonomous consumption is a component of aggregate expenditure. Equilibrium leakages will also decrease because they are a function of equilibrium Y.

If Autonomous Consumption Decreases by 50, Then