Within the Keynesian aggregate expenditures model, which of the following autonomous changes would decrease the equilibrium output?
A) A decrease in investment spending.
B) An increase in net exports.
C) An increase in government spending.
D) An increase in consumption expenditures

Question

Quizplus · Accepted Answer

In the Keynesian model, equilibrium output is determined by the level of aggregate expenditures. Autonomous changes refer to changes in spending that are not caused by changes in output. Decreases in autonomous spending, such as a decrease in investment, will decrease the total level of aggregate expenditures and lead to a decrease in equilibrium output. Increases in autonomous spending, such as an increase in government spending or consumption expenditures, will increase the total level of aggregate expenditures and lead to an increase in equilibrium output. An increase in net exports may or may not affect aggregate expenditures depending on whether it is an autonomous change or a result of changes in output.

Within the Keynesian Aggregate Expenditures Model, Which of the Following