A decline 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

A decline in autonomous consumer expenditure will lower overall spending in the economy, shifting the aggregate demand curve down. This will lead to a decrease in equilibrium output, as firms will produce less goods and services as a result of lower demand.

A Decline in Autonomous Consumer Expenditure Causes the Aggregate Demand