Suppose that a pair of graphs represents a situation in which the aggregate expenditure line and the aggregate demand curve have shifted.What change caused the shift of the aggregate expenditure line?
A) a change in disposable income
B) a change in the level of income
C) a change in autonomous investment
D) a change in the level of real GDP

Question

Suppose that a pair of graphs represents a situation in which the aggregate expenditure line and the aggregate demand curve have shifted.What change caused the shift of the aggregate expenditure line?  
A) a change in disposable income 
B) a change in the level of income 
C) a change in autonomous investment 
D) a change in the level of real GDP

Quizplus · Accepted Answer

A shift in the aggregate expenditure line could be caused by a change in any of the four components of aggregate expenditure (which are consumption, investment, government spending, and net exports). However, since the question specifically mentions the aggregate demand curve, which includes only the components of aggregate expenditure other than investment, it suggests that the shift in this case was most likely caused by a change in autonomous investment (which refers to investment spending that is not directly influenced by changes in GDP).

Suppose That a Pair of Graphs Represents a Situation in Which