Other things equal, an improvement in the expected rate of net proﬁt would
A) reduce the price level and unemployment.
B) decrease the interest rate and cause aggregate demand to increase.
C) increase consumption and net exports, causing aggregate demand to shift rightward.
D) increase investment spending, real GDP, and the price level.

Question

Quizplus · Accepted Answer

An improvement in the expected rate of net profit would make investment projects more attractive, leading to an increase in investment spending. This, in turn, would raise real GDP and the price level as the aggregate demand curve shifts rightward.

Other Things Equal, an Improvement in the Expected Rate of Net