In the Keynesian cross diagram,an increase in autonomous consumer expenditure causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________,everything else held constant.
A)up;rise
B)up;fall
C)down;rise
D)down;fall

Question

Quizplus · Accepted Answer

An increase in autonomous consumer expenditure leads to a shift of the aggregate demand curve to the right (upward) because there is an increase in the level of expenditure at each level of output. This increase in aggregate demand leads to a rise in the equilibrium level of aggregate output because firms see an increase in demand for their goods and services, leading to an increase in production and, therefore, output.

In the Keynesian Cross Diagram,an Increase in Autonomous Consumer Expenditure