An increase in autonomous expenditure shifts the AE curve
A)upward but leaves its slope unchanged.
B)upward and the curve becomes steeper.
C)downward but leaves its slope unchanged.
D)downward and the curve becomes steeper.
E)upward and the curve becomes less steep.

Question

Quizplus · Accepted Answer

An increase in autonomous expenditure shifts the Aggregate Expenditure (AE) curve upward because it increases the total spending at each level of income, but it does not affect the marginal propensity to consume, so the slope remains unchanged.

An Increase in Autonomous Expenditure Shifts the AE Curve