On the aggregate expenditure graph, suppose autonomous saving increases by $15 billion.What will be the effect on the aggregate expenditure line?
A) The aggregate expenditure line will shift upward by $15 billion.
B) The aggregate expenditure line will stay in the same position.
C) The aggregate expenditure line will shift downward by $15 billion.
D) The aggregate expenditure line will first shift downward, and then it will shift upward by $15 billion.

Question

On the aggregate expenditure graph, suppose autonomous saving increases by $15 billion.What will be the effect on the aggregate expenditure line?  
A) The aggregate expenditure line will shift upward by $15 billion. 
B) The aggregate expenditure line will stay in the same position. 
C) The aggregate expenditure line will shift downward by $15 billion. 
D) The aggregate expenditure line will first shift downward, and then it will shift upward by $15 billion.

Quizplus · Accepted Answer

Saving is a component of aggregate expenditure, so an increase in autonomous saving will decrease aggregate expenditure. As a result, the aggregate expenditure line will shift downward by $15 billion.

On the Aggregate Expenditure Graph, Suppose Autonomous Saving Increases by $15