How will an increase in autonomous investment affect the aggregate expenditure line?
A) It will shift the aggregate expenditure line upward.
B) It will shift the aggregate expenditure line downward.
C) It will result in an upward movement along the aggregate expenditure line.
D) It will result in a downward movement along the aggregate expenditure line.

Question

How will an increase in autonomous investment affect the aggregate expenditure line?  
A) It will shift the aggregate expenditure line upward. 
B) It will shift the aggregate expenditure line downward. 
C) It will result in an upward movement along the aggregate expenditure line. 
D) It will result in a downward movement along the aggregate expenditure line.

Quizplus · Accepted Answer

An increase in autonomous investment will increase the overall level of planned expenditure in an economy, resulting in a shift upward (to the right) of the aggregate expenditure line. This is because autonomous investment, by definition, is investment spending that is not influenced by the level of income or consumption in the economy. As a result, an increase in autonomous investment will directly increase the level of planned expenditure at all levels of income, leading to the upward shift in the aggregate expenditure line.

How Will an Increase in Autonomous Investment Affect the Aggregate