In the Keynesian cross diagram,a decrease in investment spending because companies become more pessimistic about investment profitability causes the aggregate demand function to shift ________ and the equilibrium level of aggregate output to ________,everything else held constant.
A)up;rise
B)up;fall
C)down;rise
D)down;fall

Question

Quizplus · Accepted Answer

A decrease in investment spending causes a leftward shift of the aggregate demand curve in the Keynesian cross diagram, leading to a lower equilibrium level of aggregate output. Option D reflects these changes.

In the Keynesian Cross Diagram,a Decrease in Investment Spending Because