If autonomous imports increase, then the aggregate expenditure curve shifts ________ and equilibrium real GDP ________.
A) upward; decreases
B) upward; increases
C) downward; decreases
D) downward; increases
E) downward; does not change

Question

Quizplus · Accepted Answer

If autonomous imports increase, then the aggregate expenditure curve shifts downward because there is a decrease in the total expenditure in the economy. As a result, the equilibrium real GDP decreases because the reduction in aggregate expenditure leads to a decrease in demand and production in the economy.

If Autonomous Imports Increase, Then the Aggregate Expenditure Curve Shifts