An increase in investment shifts the AE curve upward by an amount equal to the _______, and shifts the AD curve rightward by an amount equal to the _______.
A)change in investment divided by the multiplier; change in investment
B)change in investment times the multiplier; change in investment times the multiplier
C)change in investment; change in investment times the multiplier
D)change in investment; change in investment
E)change in investment times the multiplier; change in investment

Question

Quizplus · Accepted Answer

An increase in investment directly shifts the AE curve upward by the amount of the change in investment. The AD curve shifts rightward by the change in investment times the multiplier, reflecting the amplified effect on aggregate demand.

An Increase in Investment Shifts the AE Curve Upward by an Amount