Figure 10-5
-In Figure 10-5, which graph best illustrates the situation of an economy near full employment that experiences an increase in autonomous consumer spending?

Question

Figure 10-5 
-In Figure 10-5, which graph best illustrates the situation of an economy near full employment that experiences an increase in autonomous consumer spending?

Quizplus · Accepted Answer

Graph (2) shows an increase in autonomous consumer spending causing a rightward shift of the AD curve (from AD1 to AD2) leading to an increase in real GDP (from Y1 to Y2) while the unemployment rate remains close to the natural rate of unemployment. This is the situation of an economy near full employment experiencing an increase in autonomous consumer spending.

Figure 10-5 -In Figure 10-5, Which Graph Best Illustrates the Situation of the Situation