An increase in investment spending would cause the FE line to
A)shift to the right.
B)shift to the left.
C)remain unchanged.
D)remain unchanged if Ricardian equivalence holds; otherwise, shift to the right.

Question

Quizplus · Accepted Answer

The FE line, or full employment line, represents the level of output at full employment, which is determined by factors like labor, capital, and technology, not by investment spending.

An Increase in Investment Spending Would Cause the FE Line