-In the above figure the economy is initially at point A on the aggregate expenditure curve AE₀. Suppose firms expect profits to increase and decide to increase investment. As a result A)there is a movement along AE₁to a point such as B. B)the AE curve shifts upward to a curve such as AE₂. C)there is a movement along AE₁to a point such as C. D)the AE curve shifts downward to a curve such as AE₁.

Question

Quizplus · Accepted Answer

An increase in investment will shift the aggregate expenditure curve upward, as shown by the movement from AE0 to AE2.

-In the Above Figure the Economy Is Initially at Point