If investment spending increases by $1 million,then the aggregate demand curve shifts
A)rightward by $1 million.
B)rightward by more than $1 million.
C)rightward by less than $1 million.
D)leftward by more than $1 million.
E)leftward by less than $1 million.

Question

Quizplus · Accepted Answer

When investment spending increases, it leads to an increase in output and income. Due to the multiplier effect, the increase in aggregate demand will be greater than the initial increase in investment spending. Therefore, the aggregate demand curve will shift rightward by more than $1 million.

If Investment Spending Increases by $1 Million,then the Aggregate Demand