An increase in investment spending results in a_________ the aggregate expenditure curve and_________ the aggregate demand curve.
A) shift in; a movement along
B) shift in; has no effect on
C) shift in; a shift in
D) movement along; a shift in

Question

Quizplus · Accepted Answer

An increase in investment spending will shift the aggregate expenditure curve because it is one of the components of aggregate expenditure. This shift will also result in a shift in the aggregate demand curve because aggregate expenditure is one of the components of aggregate demand. Therefore, both the aggregate expenditure curve and aggregate demand curve will shift.

An Increase in Investment Spending Results in A_________ the Aggregate