In the Keynesian cross diagram,an increase in investment spending because companies become more optimistic about investment profitability causes the aggregate demand function to shift up,the equilibrium level of aggregate output to ________,and the IS curve to shift to the ________,everything else held constant.
A)rise;left
B)rise;right
C)fall;left
D)fall;right

Question

Quizplus · Accepted Answer

An increase in investment spending shifts the aggregate demand function up, leading to a higher equilibrium level of aggregate output and causing the IS curve to shift to the right, as it reflects higher overall spending at any given interest rate.

In the Keynesian Cross Diagram,an Increase in Investment Spending Because