A decrease in autonomous planned investment spending, other things equal, shifts the ________ curve to the ________.
A) IS; right
B) IS; left
C) MP; left
D) MP; right

Question

Quizplus · Accepted Answer

Autonomous planned investment spending is a component of the IS curve. A decrease in this spending would shift the IS curve to the left, as it represents a decrease in overall spending in the economy. Therefore, choice B is the correct answer. The MP curve is not affected by changes in autonomous planned investment spending, so choices C and D are incorrect. Choice A is incorrect because a decrease in autonomous planned investment spending would not shift the IS curve to the right.

A Decrease in Autonomous Planned Investment Spending, Other Things Equal